Slide 1: Investor Presentation Second Quarter 2011
Another step on the path to success 1 Investor Presentation Second Quarter 2011 EXHIBIT 99.1
Slide 2: Forward-looking statements
Another step on the path to success 2 Certain statements contained in this presentation which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the „„Act‟‟). In addition, certain statements in future filing
Slide 3: Business & Strategy Review
Another step on the path to success 3 Business & Strategy Review
Slide 4: Franchise Highlights
Another step on the path to success 4 Franchise Highlights Strong operating fundamentals and prudent management have resulted in solid performance and profitability throughout the recessionary period – Second quarter 2011 ROAA of 1.03% and ROAE of 9.05% – 83 consecutive quarters of profitability
Slide 5: Franchise Summary Comparison
Another step on the path to success Franchise Summary Comparison 5 Consistently solid profitability throughout the cycle, especially over the last twelve months – LTM ROAA of 1.00% compared to peer median of 0.76% – LTM ROAE of 9.06% compared to peer median of 6.70% – LTM net interest margin of 4.
Slide 6: Opportunities and Risks
Another step on the path to success 6 Opportunities and Risks Opportunities to Build Shareholder Value Risks to be Managed Efficient and prudent use of capital in future periods – Support organic growth in core strategic markets – Dividend policy – Acquisitions that meet internal criteria – Share
Slide 7: Variable Dividend / 100% Payout Ratio
Another step on the path to success 7 Variable Dividend / 100% Payout Ratio Introducing a 100% dividend payout ratio comprised of two components: – Recurring dividend based on stated payout of between 40% - 60% of quarterly earnings; currently $0.12 per share – Variable dividend based on the remai
Slide 8: Focused Business Strategy
Another step on the path to success 8 Focused Business Strategy Client intimate strategy focused on long-term, profitable relationships with clients Strong sales culture that is aggressive in attracting business with the appropriate risk and return Lines of business – Commercial – Retail – Wea
Slide 9: Low Risk Balance Sheet Stress Case
Another step on the path to success 9 Low Risk Balance Sheet Stress Case Illustrates the strength of our balance sheet assuming a full charge-off of all acquired loans under FDIC loss share agreements and a full charge-off of all uncovered non-performing loans. Nonperforming Assets = $90 million
Slide 10: Selective Acquisitions
Another step on the path to success 10 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable cover
Slide 11: Liberty Savings Bank Branch Acquisition Transaction Highlights
Another step on the path to success 11 Liberty Savings Bank Branch Acquisition Transaction Highlights Strategic Rationale Significantly enhances presence in key market of Dayton, OH Provides immediate scale and profitability compared to building similar branch network Composition and cost of f
Slide 12: Liberty Savings Bank Branch Map and Deposit Market Share
Another step on the path to success 12 Liberty Savings Bank Branch Acquisition Branch Map and Deposit Market Share Scarcity value – no true community bank of size headquartered in the Dayton market that provides the immediate scale of this transaction Acquisition provides a solid platform for ac
Slide 13: Flagstar Bank Branch Acquisition Transaction Highlights
Another step on the path to success 13 Flagstar Bank Branch Acquisition Transaction Highlights Strategic Rationale Significantly enhances presence in key market of Indianapolis, IN Demographically desirable branch locations within the Indianapolis MSA High scarcity value – very few acquisition
Slide 14: Flagstar Bank Branch Map and Deposit Market Share
Another step on the path to success 14 Flagstar Bank Branch Acquisition Branch Map and Deposit Market Share Very few community banks remaining in the Indianapolis market with the scale and branch network provided by the Flagstar branches Acquisition provides a solid platform for accelerated grow
Slide 15: Financial Review
Another step on the path to success 15 Financial Review
Slide 16: Second Quarter 2011 Financial Highlights
Another step on the path to success 16 Second Quarter 2011 Financial Highlights Quarterly net income of $16.0 million, or $0.27 per diluted common share Continued strong profitability – Return on average assets of 1.03% – Return on risk-weighted assets of 1.89% – Return on average shareholders‟
Slide 17: Pre-Tax, Pre-Provision Income
Another step on the path to success 17 Pre-Tax, Pre-Provision Income For the three months ended June 30, March 31, December 31, September 30, June 30, 2011 2011 2010 2010 2010 Pre-tax, pre-provision income 1 32,845$ 29,768$ 34,844$ 33,631$ 37,216$ Accelerated discount on acquired loans related to: L
Slide 18: Capitalization
Another step on the path to success 18 Capitalization Primary component of capital is common equity; continues to grow as a result of earnings power Tangible book value per share has increased over 75% since January 1, 2009. Strong capitalization levels remain among industry leaders and provid
Slide 19: Net Interest Margin Summary
Another step on the path to success 19 Net Interest Margin Summary 4.61%4.73%4.53% 4.59% 4.65% 0.25%0.25%0.25%0.25%0.25% 2Q10 3Q10 4Q10 1Q11 2Q11 Net interest margin Fed funds target rate Earning Asset Yield and Liability Cost 5.74% 5.73% 5.64% 5.63% 5.44% 1.45% 1.23%1.39% 1.04%1.11% 2Q10 3Q10 4Q10
Slide 20: Credit Quality Review
Another step on the path to success 20 Credit Quality Review 30.8% of total loans covered under FDIC loss share agreement Total classified assets have declined 8.5% to $184.8 million since second quarter 2010 Economic conditions in the Company‟s markets are still challenging; real estate loan
Slide 21: Noninterest Income and Expense
Another step on the path to success 21 Noninterest Income and Expense Components of Noninterest Expense For the Three Months Ended June 30, 2011 (Dollars in millions) Components of Noninterest Income For the Three Months Ended June 30, 2011 (Dollars in millions) $43.7 83% $1.4 3% $2.7 5% $4.7 9% Str
Slide 22: Deposit and Loan Composition
Another step on the path to success 22 Deposit and Loan Composition Total Deposits = $5.0 billion As of June 30, 2011 (Dollars in millions) Gross Loans = $4.0 billion As of June 30, 2011 (Dollars in millions) Western market (acquired-non-strategic) exit is essentially complete; acquired-non-strate
Slide 23: Acquisition-Related Items
Another step on the path to success 23 Acquisition-Related Items
Slide 24: Second Quarter 2011 Loan Valuation
Another step on the path to success 24 Second Quarter 2011 Loan Valuation The majority of the loans acquired as part of the FDIC-assisted transactions are accounted for under ASC Topic 310-30 which requires the Company to periodically update its forecast of expected cash flows from these loans.
Slide 25: Components of Credit Losses Covered Assets
Another step on the path to success 25 Components of Credit Losses Covered Assets For the three months ended June 30, Dollars in thousands 2011 Description Net incremental impairment for period $19,489 Reduction in expected cash flows related to certain loan pools net of prior period impairment reli
Slide 26: Comparison of Financial Impact Extreme Cases
Another step on the path to success 26 Comparison of Financial Impact 1 Extreme Cases If all acquired loans were to prepay immediately, diluted EPS would benefit by $1.48 per share as of the second quarter 2011 The absolute worst case scenario – a 100% loss on all acquired loans – would negative
Slide 27: Appendix
Another step on the path to success 27 Appendix
Slide 28: Loan Composition
Another step on the path to success 28 Loan Composition Covered Loans - $1.2 billion Uncovered Loans - $2.8 billion Total Loan Portfolio – June 30, 2011 $4.0 billion Strategic portfolio: no significant industry concentrations; geography distributed throughout footprint In-house lending limit of
Slide 29: Uncovered Loans – RE Collateral
Another step on the path to success 29 Uncovered Loans – RE Collateral Total Uncovered Loan Portfolio 1 – June 30, 2011 $2.8 Billion 1 Excludes loans covered by FDIC loss sharing agreements Construction and acquisition and land development loans represent small portion of overall portfolio Comme
Slide 30: Covered Loan Activity
Another step on the path to success 30 Covered Loan Activity Covered Loan Activity - Second Quarter 2011 Reduction in Balance Due to: March 31, Prepayments / Contractual Net Loans With June 30, (Dollars in thousands) 2011 Sales Renewals Activity 1 Charge-Offs 2 Coverage Rem. 2011 Commercial 294,300$
Slide 31: Revenue by Source
Another step on the path to success 31 Revenue by Source Strategic – Elements of the business that either existed prior to the acquisitions or were acquired with the intent to retain and grow. On a reported basis, approximately 68% of total revenue is derived from strategic businesses. Not includi
Slide 32: Funding Structure and Cost of Funds
Another step on the path to success 32 13% 14% 14% 14% 50%48% 44% 52% 33%35% 36% 31% 6% 4% 4% 4% 3Q10 4Q10 1Q11 2Q11 Noninterest-bearing deposits* Interest-bearing deposits and savings Time deposits Borrowed funds 1.39% 1.23% 1.11% * Not included in cost of funds calculation Average Interest Bearing
Slide 33: Deposit Activity
Another step on the path to success 33 Deposit Activity Average strategic transaction and savings accounts increased over $169.8 million, or 5.0%, compared to the first quarter 2011 Average money market and savings account balances increased $295.6 million, or 22.0%, compared to second quarter 2
Slide 34: Credit Quality Comparison
Another step on the path to success 34 NPLs / Loans 0 .0 0 % 0 .50 % 1.0 0 % 1.50 % 2 .0 0 % 2 .50 % 3 .0 0 % 3 .50 % 4 .0 0 % 3 Q0 8 4 Q0 8 1Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1Q10 2 Q10 3 Q10 4 Q10 1Q11 2 Q11 0 % 50 % 10 0 % 150 % 2 0 0 % 2 50 3 Q0 8 4 Q0 8 1Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1Q10 2 Q10 3 Q10 4 Q10
Slide 35: Investment Portfolio
Another step on the path to success 35 Investment Portfolio Investment portfolio represents 20.0% of total assets During the second quarter 2011, the Company purchased $249.8 million of agency mortgage backed securities Since the end of the third quarter 2010, the duration of the portfolio has
Slide 36: Investment Portfolio Composition
Another step on the path to success 36 Agencies 0% CMOs (private) 0% Other * 7% CMOs (Agency) 54% Municipal 1% MBSs (agency) 38%Sector Allocation Credit Quality Investment Grade = A rated securities Other Investment Grade = B rated securities Not Rated includes an immaterial amount of securities wit
Slide 37: Summary of Acquisition-Related Items
Another step on the path to success 37 Summary of Acquisition-Related Items For the Three Months Ended June 30, March 31, June 30, (Dollars in thousands) 2011 2011 2010 Income effect: Accelerated discount on covered loans 1,2 4,756$ 5,783$ 7,408$ Acquired-non-strategic net interest income 8,821 8,90
Slide 38: Effect on Noninterest Items
Another step on the path to success 38 Effect on Noninterest Items Noninterest Income Noninterest Expense For the Three Months Ended June 30, March 31, June 30, (Dollars in thousands) 2011 2011 2010 Total noninterest income 41,118$ 43,658$ 40,467$ Significant components of noninterest income Items l
Slide 39: Another step on the path to success 39 Another step on the path to success
Another step on the path to success 39 Another step on the path to success