EXHIBIT 99 (a)
Investor Presentation Material
Citizens South
Banking Corporation
Keefe, Bruyette & Woods, Inc.
Fifth Annual Community
Bank Investor Conference
The Pierre - Four Seasons
New York, New York
July 27 - 29, 2004
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CITIZENS SOUTH
BANKING CORPORATION
FORWARD LOOKING STATEMENTS
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.
OVERVIEW OF PRESENTATION
o History of Citizens South Banking Corporation
o At a Glance
o Management and Market Area
o Historical Financial Information
o Vision and Business Strategy - 2003 Update
o Why Own CSBC
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CITIZENS SOUTH
BANKING CORPORATION
HISTORY OF
CITIZENS SOUTH BANKING CORPORATION
o 1904 - Chartered as a North Carolina mutual building and loan association
o 1982 - Acquired Mutual Building and Savings Association of Mount Holly, NC
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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CITIZENS SOUTH
BANKING CORPORATION
AT A GLANCE
Citizens South Banking Corporation (CSBC)
Gastonia, NC
(dollars in thousands)
12-31-03 06-30-04
-------- --------
o Assets $ 495,751 $ 500,586
o Loans receivable $ 298,029 $ 299,820
o Deposits $ 342,446 $ 370,700
o Equity/Assets 17.7% 14.3%
o Shares Outstanding 8,670,313 7,522,044
o Branches Ten Ten
o Employees (FTEs) 107 108
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CITIZENS SOUTH
BANKING CORPORATION
AT A GLANCE
Citizens South Banking Corporation
12-31-03 06-30-04
-------- --------
o Stock Price $ 13.95 $ 13.18
o Book Value $ 10.11 $ 9.53
o Price to Book 137.98% 138.30%
o LTM EPS - basic $ 0.39 $ 0.35
o LTM EPS - diluted $ 0.39 $ 0.35
o LTM P/E Multiple 35.77x 37.66x
o Quarterly Dividend $ 0.06 $ 0.065
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CITIZENS SOUTH
BANKING CORPORATION
THE CITIZENS SOUTH TEAM
Total Years Previous
Bank Exp. Experience
--------- ----------
o Kim S. Price 22 First National/
President and CEO FHLB
o Paul L. Teem, Jr. 21 CSBC
EVP and Chief Admin. Officer
o V. Burton Brinson, Jr. 26 Wachovia
EVP - Group Pres. Rowan/Iredell
o Daniel M. Boyd, IV 19 First Gaston/
EVP - Group Pres. Gaston Wachovia
o Gary F. Hoskins 17 CFSLA/
EVP and CFO FHLB/OTS
o Michael R. Maguire 24 First Union/
SVP and Chief Credit Officer SCN
o J. Stephen Huffstetler 24 First Community/
SVP - Group Pres. Financial Services First Union
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CITIZENS SOUTH
BANKING CORPORATION
BRANCH LOCATIONS
[MAP OMITTED]
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CITIZENS SOUTH
BANKING CORPORATION
GROWTH OF CHARLOTTE IMPACTS
CITIZENS SOUTH BANK
[MAP OMITTED]
o Growth of Area
o Attractions
o New Jobs -
Replacing Textiles
o Population Growth
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CITIZENS SOUTH
BANKING CORPORATION
GROWTH OF AREA
o I-485 opens - new opportunities for CSBC
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CITIZENS SOUTH
BANKING CORPORATION
DEPOSIT MARKET SHARE - GASTON COUNTY
June 30, 2002 June 30, 2003
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
--------------------- -------- -------- -------- -------- ------ ------
1 Branch Banking and Trust $ 539,360 30.95% $ 526,101 30.19% ($ 13,259) -2.46%
2 Wachovia Bank $ 343,031 19.69% $ 307,570 17.65% ($ 35,461) -10.34%
- --------------------------------------------------------------------------------------------------------------------------
3 Citizens South Bank $ 185,007 10.62% $ 206,949 11.88% $ 21,942 11.86%
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4 First Gaston Bank $ 123,823 7.11% $ 157,733 9.05% $ 33,910 27.39%
5 Bank of America $ 124,864 7.17% $ 125,295 7.19% $ 431 0.35%
6 National Bank of Commerce $ 94,246 5.41% $ 90,462 5.19% ($ 3,784) -4.02%
7 RBC Centura Bank $ 96,332 5.53% $ 89,013 5.11% ($ 7,319) -7.60%
8 Belmont Federal S&LA $ 72,570 4.16% $ 75,854 4.35% $ 3,284 4.53%
9 Cherryville Federal S&LA $ 59,417 3.41% $ 61,736 3.54% $ 2,319 3.90%
10 First National Bank of Shelby $ 39,846 2.29% $ 39,853 2.29% $ 7 0.02%
11 Fidelity Bank $ 33,984 1.95% $ 31,934 1.83% ($ 2,050) -6.03%
12 SouthTrust Bank $ 31,313 1.80% $ 29,962 1.72% ($ 1,351) -4.31%
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Total Deposits - Gaston County $1,743,793 $1,742,462 ($ 1,331) -0.08%
==========================================================================================================================
Source: 2003 Market Share Report published by the FDIC
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CITIZENS SOUTH
BANKING CORPORATION
DEPOSIT MARKET SHARE - ROWAN COUNTY
June 30, 2002 June 30, 2003
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
--------------------- -------- -------- -------- -------- ------ ------
1 Farmers & Merchants Bank $ 278,740 23.64% $ 286,456 24.98% $ 7,716 2.77%
2 National Bank of Commerce $ 252,969 21.45% $ 232,418 20.27% ($ 20,551) -8.12%
3 Wachovia Bank $ 241,920 20.51% $ 207,398 18.09% ($ 34,522) -14.27%
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4 Citizens South Bank $ 115,470 9.79% $ 110,538 9.64% ($ 4,932) -4.27%
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5 Rowan Savings Bank, SSB $ 99,813 8.46% $ 106,057 9.25% $ 6,244 6.26%
6 Bank of America $ 41,750 3.54% $ 46,792 4.08% $ 5,042 12.08%
7 Bank of the Carolinas $ 43,501 3.69% $ 45,313 3.95% $ 1,812 4.17%
8 First Charter Bank $ 39,285 3.33% $ 40,246 3.51% $ 961 2.45%
9 First Bank $ 34,997 2.97% $ 38,611 3.37% $ 3,614 10.33%
10 Fidelity Bank $ 15,895 1.35% $ 17,656 1.54% $ 1,761 11.08%
11 South Trust Bank $ 14,973 1.27% $ 15,200 1.33% $ 227 1.52%
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Total Deposits - Rowan County $1,179,313 100.00% $1,146,685 100.00% ($ 32,628) -2.77%
=========================================================================================================================
Source: 2003 Market Share Report published by the FDIC
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CITIZENS SOUTH
BANKING CORPORATION
DEPOSIT MARKET SHARE - IREDELL COUNTY
June 30, 2002 June 30, 2003
------------- ------------- Amount of Percent of
Financial Institution Deposits Market % Deposits Market % Growth Growth
--------------------- -------- -------- -------- -------- ------ ------
1 Branch Banking and Trust Co. $ 312,648 20.80% $ 312,345 20.78% ($ 303) -0.10%
2 Bank of America $ 266,303 17.71% $ 273,917 18.22% $ 7,614 2.86%
3 Wachovia Bank $ 243,966 16.23% $ 245,828 16.35% $ 1,862 0.76%
4 Yadkin Valley Bank & Trust $ 182,704 12.15% $ 198,827 13.23% $ 16,123 8.82%
5 First Charter National Bank $ 94,368 6.28% $ 104,876 6.98% $ 10,508 11.14%
6 Mooresville Savings Bank, SSB $ 93,061 6.19% $ 96,603 6.43% $ 3,542 3.81%
7 First Citizens Bank and Trust $ 66,686 4.44% $ 73,725 4.90% $ 7,039 10.56%
8 RBC Centura Bank $ 0 0.00% $ 71,164 4.73% $ 71,164 NA
9 SouthTrust Bank $ 44,270 2.94% $ 53,575 3.56% $ 9,305 21.02%
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10 Citizens South Bank $ 48,411 3.22% $ 51,752 3.44% $ 3,341 6.90%
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11 Community Bank $ 23,258 1.55% $ 20,690 1.38% ($ 2,568) -11.04%
12 National Bank of Commerce $ 69,500 4.62% $ 0 0.00% ($ 69,500) -100.00%
- --------------------------------------------------------------------------------------------------------------------------
Total Deposits - Iredell County $1,445,175 96.13% $1,503,302 100.00% $ 58,127 4.02%
==========================================================================================================================
Source: 2003 Market Share Report published by the FDIC
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CITIZENS SOUTH
BANKING CORPORATION
TOTAL ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
12/31/2000 $252,750
12/31/2001 $447,581
12/31/2002 $492,873
12/31/2003 $495,751
6/30/2004 $500,586
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CITIZENS SOUTH
BANKING CORPORATION
LOANS RECEIVABLE
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Total Loans 1-4 Family Other
----------- ---------- -----
(in thousands)
12/31/2000 $160,691 $109,907 $ 50,784
12/31/2001 $337,535 $196,572 $140,963
12/31/2002 $302,990 $148,844 $154,146
12/31/2003 $298,029 $114,121 $183,908
6/30/2004 $299,820 $ 95,335 $204,485
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CITIZENS SOUTH
BANKING CORPORATION
COMMERCIAL LOAN PORTFOLIO
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Commercial Loans
(in thousands)
12/31/2000 $ 32,601
12/31/2001 $ 76,080
12/31/2002 $ 92,933
12/31/2003 $125,373
6/30/2004 $142,225
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CITIZENS SOUTH
BANKING CORPORATION
CONSUMER LOAN PORTFOLIO
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Consumer Loans
(in thousands)
12/31/2000 $18,183
12/31/2001 $64,883
12/31/2002 $61,213
12/31/2003 $58,535
6/30/2004 $62,260
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CITIZENS SOUTH
BANKING CORPORATION
LOAN PORTFOLIO MIX
[THE FOLLOWING TABLES WERE REPRESENTED BY PIE CHARTS IN THE PRINTED MATERIAL.]
Loan Mix - 12/31/01
One-to-four family 60.4%
Commercial real estate 18.6%
Commercial / Industrial 2.0%
Consumer 18.9%
Total 100.0%
Loan Mix - 06/30/04
One-to-four family 31.8%
Commercial real estate 43.4%
Commercial / Industrial 4.1%
Consumer 20.8%
Total 100.0%
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CITIZENS SOUTH
BANKING CORPORATION
NONPERFORMING ASSETS TO TOTAL ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
12/31/2000 0.19%
12/31/2001 0.59%
12/31/2002 0.37%
12/31/2003 0.14%
6/30/2004 0.20%
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CITIZENS SOUTH
BANKING CORPORATION
TOTAL DEPOSITS
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
12/31/2000 $167,931
12/31/2001 $353,692
12/31/2002 $340,862
12/31/2003 $342,446
6/30/2004 $370,700
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CITIZENS SOUTH
BANKING CORPORATION
DEPOSIT PORTFOLIO MIX
[THE FOLLOWING TABLES WERE REPRESENTED BY PIE CHARTS IN THE PRINTED MATERIAL.]
Deposit Mix - 12/31/01
DDAs 9.4%
Savings / MMDA 20.8%
Time Deposits 69.8%
Total 100.0%
Deposit Mix - 09/30/04
DDAs 13.0%
Savings / MMDA 25.0%
Time Deposits 62.1%
Total 100.0%
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CITIZENS SOUTH
BANKING CORPORATION
NET INTEREST MARGIN
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
12/31/2000 2.92%
12/31/2001 2.52%
12/31/2002 3.17%
12/31/2003 2.67%
6/30/2004 2.58%
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CITIZENS SOUTH
BANKING CORPORATION
MARGIN IMPROVEMENT PLAN
>> Fund commercial and consumer loan growth over the next 24 months from MBS
cash flows and maturing investments ($50 to $75 million);
>> Continue to grow DDA's and other non-time deposits;
>> Balance sheet positioned to benefit from moderate rate increases (positive
gap);
>> 1-4 mortgage loan prepayments will slow with rising rates facilitating
improved loan growth
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CITIZENS SOUTH
BANKING CORPORATION
NONINTEREST OPERATING INCOME
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
12/31/2000 $2,202
12/31/2001 $2,438
12/31/2002 $3,484
12/31/2003 $3,829
6 mos ended 06/30/04 $2,006
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CITIZENS SOUTH
BANKING CORPORATION
Bank-Like Interest Sensitivity
ONE YEAR CUMULATIVE GAP TO TOTAL ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
12/31/2000 -21.00%
12/31/2001 -8.70%
12/31/2002 11.95%
12/31/2003 7.72%
3/31/2004 14.93%
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CITIZENS SOUTH
BANKING CORPORATION
QUARTERLY DILUTED EPS
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
3/31/2001 $0.06
6/30/2001 $0.06
9/30/2001 $0.05
12/31/2001 $0.03
3/31/2002 $0.11
6/30/2002 $0.13
9/30/2002 $0.14
12/31/2002 $0.14
3/31/2003 $0.14
6/30/2003 $0.13
9/30/2003 $0.01
12/31/2003 $0.11
3/31/2004 $0.12
6/30/2004 $0.12
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CITIZENS SOUTH
BANKING CORPORATION
CAPITAL TO ASSETS RATIO
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
12/31/00 15.73%
12/31/01(1) 9.30%
12/31/02(2) 19.56%
12/31/03 17.68%
6/30/04 14.32%
(1) Innes Street Acquisition
(2) Second Step Stock Conversion
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CITIZENS SOUTH
BANKING CORPORATION
SHARES OUTSTANDING
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
(in thousands)
12/31/2000 4,219
12/31/2001 4,209
12/31/2002(1) 9,063
12/31/2003 8,670
6/30/2004 7,522
(1) Second step conversion on 09-30-02 which increased number of shares by
approximately 5.3 million.
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CITIZENS SOUTH
BANKING CORPORATION
KBW CONFERENCE 2003
VISION AND BUSINESS STRATEGY
2004
I. Create a Bank-Like Organization CSBC Grade
----------
A. Management / Culture B-
B. Transitioning Balance Sheet B+
C. Grow Market Share B
D. Generate Noninterest Sources B
of Revenue
E. Reduce Interest Rate Risk B+
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CITIZENS SOUTH
BANKING CORPORATION
KBW CONFERENCE 2003
VISION AND BUSINESS STRATEGY
2004
CSBC Grade
----------
II. Franchise Development C
A. De novo Offices
1. Mooresville
2. Belmont
3. York County, SC
B. Operations Center Consolidation
C. Branch / Corporate Office Relocation
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CITIZENS SOUTH
BANKING CORPORATION
KBW CONFERENCE 2003
VISION AND BUSINESS STRATEGY
2004
III. Enhance Shareholder Value CSBC Grade
----------
A. Leverage Capital B+
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 A-
1. Execute Stock Repurchase Plan
2. Evaluate Dividend Policy
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CITIZENS SOUTH
BANKING CORPORATION
2004 PROJECTS ON THE HORIZON
>> Kickoff Hispanic Banking Initiative
- Hired Hispanic Management
- Pursuing Alliance with Mexican Bank
>> Expand Investment / Brokerage Services
- Trust Company Investment
- Wealth Management
- Human Talent
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CITIZENS SOUTH
BANKING CORPORATION
WHY OWN CSBC
o Management Team (Bankers Converting Thrift)
o Thrift to Bank Balance Sheet Transformation
o Thrift to Bank Cultural Transformation
o Dynamic Market - Charlotte, NC Region
o Proven Ability to Leverage Capital
o Attractive Price
o Margin Improvement Plan
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CITIZENS SOUTH
BANKING CORPORATION
TOTAL RETURN PERFORMANCE
[LINE CHART OMITTED]
Period Ending
Index 04/13/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 06/30/04
Citizens South Banking
Corporation 10,000 13,094 11,648 11,517 16,120 23,843 33,225 31,683
Russell 2000 10,000 8,864 10,748 10,423 10,682 8,494 12,507 13,354
SNL Southeast Thrift Index 10,000 7,926 7,864 7,740 11,834 13,882 21,052 21,069
Source : SNL Financial LC, Charlottesville, VA
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CITIZENS SOUTH
BANKING CORPORATION
We thank you for your interest in
"CSBC"
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CITIZENS SOUTH
BANKING CORPORATION