EXHIBIT 99.1
Investor Presentation Material
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Citizens South Banking Corporation
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Keefe, Bruyette & Woods, Inc.
Honor Roll and Fourth Annual Community Bank Investor Conference
The Metropolitan Club
New York, New York
July 29, 2003
[LOGO] CITIZENS SOUTH
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BANKING CORPORATION
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FORWARD LOOKING STATEMENTS
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This presentation contains forward looking statements with respect to the
financial condition and operations of Citizens South Banking Corporation and its
wholly-owned subsidiary, Citizens South Bank.
These forward looking statements involve risks and uncertainties. Factors that
may cause actual results to differ materially from those projected in the
forward looking statements include, among others, the following possibilities:
1) general economic conditions are less favorable than expected; 2) changes in
market interest rates reduce interest margins; 3) risks in the loan portfolio,
including prepayments, are greater than expected; 4) legislation or regulatory
changes adversely affect the businesses in which the company is engaged and; 5)
competitive pressures increase significantly. For further information and other
factors that may affect the accuracy of forward looking statements, please refer
to reports that the company files from time to time with the SEC, including
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K. Readers are cautioned not to place undue reliance on these forward
looking statements, which reflect management's judgements only as of the date
hereof. The company undertakes no obligation to publicly revise these forward
looking statements to reflect events and circumstances that may arise after the
date hereof.
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BANKING CORPORATION
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OVERVIEW OF PRESENTATION
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o History of Citizens South Banking Corporation
o At a Glance
o Historical Financial Information
o Vision and Business Strategy
o Why Own CSBC
[LOGO] CITIZENS SOUTH
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BANKING CORPORATION
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HISTORY OF CITIZENS SOUTH BANKING CORPORATION
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o 1904 - Chartered as a North Carolina mutual building and loan association
o 1982 - Acquired Mutual Building and Savings Association of Mount Holly
o 1998 - Converted to a Mutual Holding Company
o 2001 - Acquired Innes Street Financial Corporation
o 2002 - Converted to a stock holding company
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BANKING CORPORATION
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AT A GLANCE
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Citizens South Banking Corporation
(dollars in thousands)
12-31-02 06-30-03
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o Assets $ 492,567 $ 501,217
o Loans, net $ 299,906 $ 298,757
o Deposits $ 340,862 $ 345,014
o Equity $ 96,383 $ 95,253
o Shares Outstanding 9,062,727 8,926,908
o Branches Nine Ten
o Employees (FTEs) 106 114
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BANKING CORPORATION
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AT A GLANCE
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Citizens South Banking Corporation
12-31-02 06-30-03
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o Stock Price $10.20 $13.24
o Book Value $10.64 $10.67
o Price to Book 95.86% 124.09%
o LTM EPS - basic $ 0.51 $ 0.55
o LTM EPS - diluted $ 0.51 $ 0.55
o LTM P/E Multiple 20.0x 24.1x
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BANKING CORPORATION
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EXECUTIVE MANAGEMENT TEAM
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Years with Total Yrs Prior
CSBC Bank Exp. Employment
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o Kim S. Price 6 22 First Natl/
President and CEO FHLB
o Paul L. Teem, Jr. 20 20 CSBC
EVP and Chief Admin. Officer
o Vance B. Brinson, Jr. 1 25 Wachovia
EVP Commercial Banking
o Daniel M. Boyd, IV 9 mos 18 First Gaston/
EVP Business Development Wachovia
o Gary F. Hoskins 6 17 CFSLA/
EVP and CFO OTS
o Michael R. Maguire 4 23 First Union
SVP and Chief Credit Officer
o J. Stephen Huffstetler 6 24 First Comm./
SVP Retail Banking First Union
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BANKING CORPORATION
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BRANCH LOCATIONS
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[MAP OMITTED]
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BANKING CORPORATION
DEPOSIT MARKET SHARE - GASTON COUNTY
June 30, 2001 June 30, 2002
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
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1 Branch Banking and Trust $ 552,931 31.71% $ 539,360 30.93% ($13,571) -2.45%
2 Wachovia Bank (1) $ 329,910 18.92% $ 343,031 19.67% $ 13,121 3.98%
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3 Citizens South Bank $ 182,057 10.44% $ 185,007 10.61% $ 2,950 1.62%
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4 Bank of America $ 142,318 8.16% $ 124,864 7.16% ($17,454) -12.26%
5 First Gaston Bank $ 101,152 5.80% $ 123,823 7.10% $ 22,671 22.41%
6 RBC Centura Bank $ 94,969 5.45% $ 96,332 5.52% $ 1,363 1.44%
7 National Bank of Commerce $ 95,534 5.48% $ 94,246 5.40% ($1,288) -1.35%
8 Belmont Federal S&LA $ 72,025 4.13% $ 72,570 4.16% $ 545 0.76%
9 Cherryville Federal S&LA $ 56,204 3.22% $ 59,417 3.41% $ 3,213 5.72%
10 First National Bank of Shelby $ 36,804 2.11% $ 39,846 2.29% $ 3,042 8.27%
11 Fidelity Bank $ 33,630 1.93% $ 33,984 1.95% $ 354 1.05%
12 SouthTrust Bank $ 32,176 1.85% $ 31,313 1.80% ($863) -2.68%
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Total Deposits - Gaston County $1,729,710 $1,743,793 $ 14,083 0.81%
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Footnotes:
(1) Deposits for Wachovia and First Union were consolidated for 2001 in order
to give a comparable analysis for 2002.
Source: 2002 Market Share Report published by the FDIC
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BANKING CORPORATION
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DEPOSIT MARKET SHARE - ROWAN COUNTY
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June 30, 2001 June 30, 2002
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
--------------------- -------- -------- -------- -------- --------- ----------
1 Farmers & Merchants Bank $ 259,454 22.98% $ 278,740 23.64% $ 19,286 7.43%
2 National Bank of Commerce $ 252,386 22.35% $ 252,969 21.45% $ 583 0.23%
3 Wachovia Bank (1) $ 263,611 23.34% $ 241,920 20.51% ($21,691) -8.23%
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4 Citizens South Bank $ 119,177 10.55% $ 115,470 9.79% ($ 3,707) -3.11%
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5 Rowan Savings Bank, SSB $ 94,186 8.34% $ 99,813 8.46% $ 5,627 5.97%
6 Bank of the Carolinas $ 30,960 2.74% $ 43,501 3.69% $ 12,541 40.51%
7 Bank of America $ 35,299 3.13% $ 41,750 3.54% $ 6,451 18.28%
8 First Charter Bank $ 38,568 3.42% $ 39,285 3.33% $ 717 1.86%
9 First Bank (2) $ 10,043 0.89% $ 34,997 2.97% $ 24,954 248.47%
10 Fidelity Bank $ 15,506 1.37% $ 15,895 1.35% $ 389 2.51%
11 South Trust Bank $ 10,098 0.89% $ 14,973 1.27% $ 4,875 48.28%
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Total Deposits - Rowan County $1,129,288 100.00% $1,179,313 100.00% $ 50,025 4.43%
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Footnotes:
(1) Deposits for Wachovia and First Union were consolidated for 2001 in order
to give a comparable analysis for 2002.
(2) Purchased deposits and office from former First Union
Source: 2002 Market Share Report published by the FDIC
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BANKING CORPORATION
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DEPOSIT MARKET SHARE - IREDELL COUNTY
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June 30, 2001 June 30, 2002
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
--------------------- -------- -------- -------- -------- --------- ----------
1 Branch Banking and Trust Co. $ 307,837 21.30% $ 312,648 21.63% $ 4,811 1.56%
2 Bank of America $ 255,923 17.71% $ 266,303 18.43% $ 10,380 4.06%
3 Wachovia Bank (1) $ 237,427 16.43% $ 243,966 16.88% $ 6,539 2.75%
4 Piedmont Bank $ 154,374 10.68% $ 182,704 12.64% $ 28,330 18.35%
5 First Charter National Bank $ 102,262 7.08% $ 94,368 6.53% ($7,894) -7.72%
6 Mooresville Savings Bank, SSB $ 96,151 6.65% $ 93,061 6.44% ($3,090) -3.21%
7 National Bank of Commerce $ 70,764 4.90% $ 69,500 4.81% ($1,264) -1.79%
8 First Citizens Bank and Trust $ 68,563 4.74% $ 66,686 4.61% ($1,877) -2.74%
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9 Citizens South Bank $ 52,796 3.65% $ 48,411 3.35% ($4,385) -8.31%
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10 SouthTrust Bank $ 48,591 3.36% $ 44,270 3.06% ($4,321) -8.89%
11 Community Bank $ 20,540 1.42% $ 23,258 1.61% $ 2,718 13.23%
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Total Deposits - Iredell County $1,415,228 97.93% $1,445,175 100.00% $ 29,947 2.12%
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Footnotes:
(1) Deposits for Wachovia and First Union were consolidated for 2001 in order
to give a comparable analysis for 2002.
Source: 2002 Market Share Report published by the FDIC
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BANKING CORPORATION
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TOTAL ASSETS
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
$235,742 $252,750 $447,581 $492,567 $501,217
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12/31/1999 12/31/2000 12/31/2001 (1) 12/31/2002 6/30/2003
(1) Includes the assets of Innes Street Financial Corporation which at the
time of the acquisition were $222 million
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BANKING CORPORATION
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LOANS RECEIVABLE, NET
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
$169,931 $158,820 $334,321 $299,906 $298,757
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12/31/1999 12/31/2000 12/31/2001 (1) 12/31/2002 6/30/2003
(1) Includes the loans of Innes Street Financial Corporation which at the time
of the acquisition were $171 million
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BANKING CORPORATION
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LOAN PORTFOLIO MIX
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[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Consumer 19.1% Consumer 18.9%
Commercial / Industrial 4.5% Commercial / Industrial 2.0%
Commercial real estate 25.9% Commercial real estate 14.4%
Construction 4.9% Construction 4.8%
Multifamily 3.8% Multifamily 2.5%
One-to-four family 57.3%
At June 30, 2003 December 31, 2001
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BANKING CORPORATION
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NONPERFORMING ASSETS TO TOTAL ASSETS
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
0.16% 0.19% 0.59% 0.37% 0.19%
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12/31/1999 12/31/2000 12/31/2001 12/31/2002 6/30/2003
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BANKING CORPORATION
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TOTAL DEPOSITS
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
$158,603 $167,931 $353,692 $340,862 $345,014
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12/31/1999 12/31/2000 12/31/2001(1) 12/31/2002 6/30/2003
(1) Includes the deposits of Innes Street Financial Corporation which at the
time of the acquisition were $174 million
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BANKING CORPORATION
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DEPOSIT PORTFOLIO MIX
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[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Money Market 12.4% Money Market 8.3%
Checking 8.3% Checking 7.2%
Non-interest Bearing 3.8% Non-interest Bearing 2.2%
Savings 11.4% Savings 12.4%
Time Deposits 64.0% Time Deposits 69.8%
June 30, 2003 December 31, 2001
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BANKING CORPORATION
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NONINTEREST INCOME
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
$2,470 $2,473 $3,006 $4,121 $2,443
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12/31/1999 12/31/2000 12/31/2001 12/31/2002 6 mos ended
06/30/03
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BANKING CORPORATION
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NET INTEREST MARGIN
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
3.20% 2.92% 2.52% 3.17% 2.79%
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12/31/1999 12/31/2000 12/31/2001 12/31/2002 6/30/2003
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BANKING CORPORATION
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QUARTERLY DILUTED EPS
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[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]
$0.06 $0.06 $0.05 $0.03 $0.11 $0.13 $0.14 $0.14 $0.14 $0.13
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3/31/2001 6/30/2001 9/30/2001 12/31/2001 3/31/2002 6/30/2002 9/30/2002 12/31/2002 3/31/2003 6/30/2003
[LOGO] CITIZENS SOUTH
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BANKING CORPORATION
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VISION AND BUSINESS STRATEGY
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I. Create a Banklike Organization
A. Management / Culture
B. Transitioning Balance Sheet
C. Grow Market Share
D. Generate Noninterest Sources of Revenue
E. Reduce Interest Rate Risk
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BANKING CORPORATION
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VISION AND BUSINESS STRATEGY
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II. Franchise Development
A. De novo Offices
1. Mooresville
2. Belmont
3. York County, SC
B. Remodel Salisbury and Rockwell Offices
C. Operations Center Consolidation
D. Branch / Corporate Office Relocation
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BANKING CORPORATION
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BANKING CORPORATION
Rockwell, NC
Branch Renovation
[GRAPHIC OMITTED]
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VISION AND BUSINESS STRATEGY
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III. Enhance Shareholder Value
A. Leverage Capital
1. Grow retail and business banking
2. Establish de novo branches
3. Investigate branch acquisitions
4. Seek related business opportunities
5. Patient pursuit of acquisitions
B. Manage Capital
1. Execute Stock Repurchase Plan
2. Evaluate Dividend Policy
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BANKING CORPORATION
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WHY OWN CSBC
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o Management Team
o Thrift to Bank Balance Sheet Transformation
o Thrift to Bank Cultural Transformation
o Dynamic Market - Charlotte/Gastonia/Rock Hill MSA
o Proven Ability to Leverage Capital
o Attractive Price
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BANKING CORPORATION
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TOTAL RETURN PERFORMANCE
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Total Return Performance
[LINE CHART OMITTED]
Index 04/13/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 06/30/03
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Citizens South Banking Corp. 10,000 13,094 11,648 11,517 16,120 23,843 31,272
Russell 2000 10,000 8,864 10,748 10,423 10,682 8,494 10,013
SNL Southeast Thrift Index 10,000 7,926 7,864 7,740 11,834 13,882 16,342
Note: Citizens South Banking Corp. data based upon original $10.00 IPO price.
Note: Russell 2000 and SNL Southeast Thrift Index values based upon closing
values on 4/12/98.
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Source : SNL Financial LC, Charlottesville, VA (434) 977-1600
(C) 2003
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BANKING CORPORATION
We thank you for your interest in "CSBC"
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BANKING CORPORATION