Harleysville National — Shareholder Meeting (April 2009)
40 slides from Harleysville National's shareholder meeting presentation, Apr 28, 2009
Slide 1: Celebrating 100 years of tradition
From Berks to Bucks County, Chester County to Carbon County, we invest in our communities and businesses every day. Celebrating 100 years of tradition
Slide 2: 2009 Annual Meeting of Shareholders
2009 Annual Meeting of Shareholders April 28, 2009 Presidential Caterers Norristown, PA
Slide 3: Paul D. Geraghty, President and CEO
2009 Annual Meeting of Shareholders Paul D. Geraghty President and Chief Executive Officer
Slide 4: We Are Here
We Are Here o Great franchise o Strong team o Many accomplishments
Slide 5: How Did We Get Here?
How Did We Get Here? o Economic environment o Philosophy and focus
Slide 6: Where We Are Going
Where We Are Going o Dedicated to getting to a great place o Just need time
Slide 7: Forward-Looking Information
Forward-Looking Information During the course of this presentation, management may make projections and forward-looking statements regarding events or the future financial performance of Harleysville National Corporation. We wish to caution you that these forward-looking statements involve certain r
Slide 8: We Are Here
We Are Here o Great franchise o Strong team o Many accomplishments
Slide 9: Harleysville Today
Harleysville Today o Exceptional demographics and footprint o Over 80 branches in attractive markets o Strong fee-based businesses o Capable, highly experienced management team
Slide 10: 2008: A Year of Significant Accomplishments
2008: A Year of Significant Accomplishments o Completed Willow acquisition n Seamless integration n Disciplined in-market expansion n Leverages combined strengths n Positions Harleysville for long term
Slide 11: 2008: A Year of Significant Accomplishments
2008: A Year of Significant Accomplishments o Formed new executive team, management reorganized o Strengthened credit administration o Increased net interest margin by 22 basis points o Boosted noninterest income by 7% o Experienced 5% organic loan growth o Profitable results
Slide 12: Financial Performance (earnings per share)
2006 2007 2008 Core Performance* $1.11 $1.03 $1.11 Credit Cost ** (.02) (0.17) (0.28) Non Core Gain (Loss/Exp.) .25 .04 (.05) Reported Net Income $1.34 $0.90 $0.78 * Represents a non-GAAP disclosure **Represents interest foregone on avg. nonperforming assets @ 7% and provision in excess of 20 bps on
Slide 13: How Did We Get Here?
How Did We Get Here? o Economic environment o Philosophy and focus
Slide 14: 2008: A Year of Unprecedented Challenges
2008: A Year of Unprecedented Challenges o Harleysville not immune o Economy n Recession n Unemployment n Plummeting real estate valuations o Political changes affect regulatory environment
Slide 15: Loan Portfolio Segmentation
Loan Portfolio Segmentation
Slide 16: Credit Portfolio
Credit Portfolio o Harleysville increased loan loss reserves to $50 million at year end n Nonperforming assets increased to $78.5 million at year end n Nonperforming assets: 1.43% of total assets (0.56% at end of ’07)
Slide 17: Harleysville National Corporation Capital Measures
Capital Measure HNC Ratio at 12/31/08 Adequately Capitalized* Well- Capitalized* Total Capital to Risk- Weighted Assets 8.88% 8% 10% Tier I Capital (to risk- weighted assets) 7.73% 4% 6% Tier 1 Capital (to average assets) 8.19% 4% 5% *Reflects current regulatory standard as of 3/31/09 Harleysville N
Slide 18: Dividend Reduction
Dividend Reduction o Strong precautionary measure o Protect and strengthen balance sheet o Safeguard your long-term investment in Harleysville n Build capital n Enhance shareholder value
Slide 19: Expense Reductions
Expense Reductions o Reduced compensation and staffing expenses o Curtailed capital expenditures o Consolidated branches o Decreased discretionary expense
Slide 20: Expense Reductions
Expense Reductions We cannot control the economy. We can control expenses Harleysville is taking the hard action necessary to improve financial results, enhance efficiency, and reduce our operating costs
Slide 21: Where We Are Going
Where We Are Going o Restoring franchise to historical performance o Challenges not structural o Foundation is strong
Slide 22: Attractive Footprint
Attractive Footprint
Slide 23: Progress Made
Progress Made o Strengthened core earnings o Strategically focused business model o Talented players across the line o Underwriting standards and credit management
Slide 24: George S. Rapp, CPA, EVP and CFO
2009 Annual Meeting of Shareholders George S. Rapp, CPA Executive Vice President, Chief Financial Officer
Slide 25: Diluted Earnings Per Share
* Adjusted for stock dividend Diluted Earnings Per Share*
Slide 26: Assets: Year End Balances
Assets: Year End Balances (in millions)
Slide 27: Loans: Year End Balances
Loans: Year End Balances (in millions)
Slide 28: Deposits: Year End Balances
Deposits: Year End Balances (in millions)
Slide 29: Net Interest Margin
Source: SNL Financial Net Interest Margin
Slide 30: Other Income
* excluding gains/loss on sales of investment securities and non-recurring revenue Other Income* (in millions)
Slide 31: Return on Average Equity
Source: SNL Financial Return on Average Equity
Slide 32: Efficiency Ratio
Source: SNL Financial Efficiency Ratio
Slide 33: Q1 2009 Performance: Key Results
3/31/08 3/31/09 Diluted EPS $.23 $.11 Net Interest Margin 2.91% 3.02% Provision for Loan Losses $1,960 $7,121 Total Assets $3,894 $5,646 Total Loans $2,482 $3,616 Total Deposits $2,988 $4,147 Key Results (dollars in millions) Q1 2009 Performance
Slide 34: Q1 2009 Performance: Asset Quality
12/31/08 3/31/09 Loan Loss Reserve $49,955 $53,062 Nonperforming Assets $78,535 $89,474 Loan Loss Reserve / Loans 1.36% 1.47% NPAs / Assets 1.43% 1.58% Charge-offs / Avg. Loans 0.36% 0.44% Asset Quality (dollars in millions) Q1 2009 Performance
Slide 35: HNBC: Nasdaq Bank Composite
Source: SNL Financial HNBC: Nasdaq Bank Composite
Slide 36: HNBC: Peer Bank Composite
Source: SNL Financial HNBC: Peer Bank Composite
Slide 37: Paul D. Geraghty, President and CEO
2009 Annual Meeting of Shareholders Paul D. Geraghty President and Chief Executive Officer
Slide 38: 2009 and Beyond
2009 and Beyond o Execution culture o Demand deposits o Cross-sell: corporate-wide focus on relationships o Improved execution in retail o Return on Assets
Slide 39: Question and Answer Session
Question and Answer Session
Slide 40: Harleysville
Harleysville Seu
Harleysville National — Shareholder Meeting (April 2009) on 6ix