Slide 1: Investor Presentation 4Q 2007
Slide: 1 SubTitle: February 20, 2008 Investor Presentation 4Q 2007
Slide 2: Safe Harbor Statement
Slide: 2 Title: Safe Harbor Statement Body: Certain statements contained in this presentation, including, without limitation, statements containing the words “believes”, “anticipates”, “intends”, and “expects”, and words of similar import, constitute “forward-looking statements” within the meaning o
Slide 3: Temecula Valley Profile
Slide: 3 Title: Temecula Valley Profile Body: Headquartered in Temecula, CA Founded in December, 1996 $1.32 billion in assets at December 31, 2007 Market cap of $ 110.9 million* Listed on NASDAQ (Global Select Market) in July 2005 Ticker symbol: TMCV * As of February 15, 2008
Slide 4: Three Core Business Lines Serve Three Distinct Markets
Slide: 4 Title: Three Core Business Lines Serve Three Distinct Markets Body: Community Banking: Consumer, small- & mid-sized commercial loans 11 branches in Inland Empire & San Diego County Construction Lending: 6 offices in California SBA 7a & 504 Lending: 17 SBA loan officers in 5 states (Gp:) Con
Slide 5: Community Banking: One of the Largest & Fastest Growing Franchises in U.S.
Slide: 5 Title: Community Banking: One of the Largest & Fastest Growing Franchises in U.S. Body: Riverside County: Total deposits: $20.8 billion* TMCV has 2.6% deposit share Est. 5-yr. population growth: 21.6% Three full-service offices San Diego County: Total deposits: $47.0 billion* Est. 5-yr. pop
Slide 6: Community Banking: Small Business Loans & Deposits
Slide: 6 Title: Community Banking: Small Business Loans & Deposits Small Business & Consumer Loans Core Deposits (Gp:) DDA (Gp:) MM & NOW (Gp:) Savings (Gp:) CDs < $100M Opening new branches in commercial locations Introduced suite of business cash management products in 2007
Slide 7: Temecula is Primarily A Real Estate Lender
Slide: 7 Title: Temecula is Primarily A Real Estate Lender Primary focus on real estate as collateral RE supports 93% of loans Conservative loan-to-value advances Multiple sources of repayment Cash flow Sale of assets Strength of guarantor 85.8% of loan portfolio re-prices / matures within a year Lo
Slide 8: Management Team Is Experienced in California Banking and Real Estate Lending
Slide: 8 Title: Management Team Is Experienced in California Banking and Real Estate Lending Steve Wacknitz: Chairman, President and CEO Founder of Temecula Valley Bank in 1996 45 years of California banking experience Fallbrook National Bank: President & CEO 1984 to 1995; Founding member Rancho Vis
Slide 9: Geographic Distribution of Loan Portfolio
Slide: 9 Title: Geographic Distribution of Loan Portfolio December 31, 2007 = $1.24 Billion (Gp:) Other States, 27% (Gp:) California, 73% (Gp:) $905 million
Slide 10: SBA Lending: A Growth Opportunity
Slide: 10 Title: SBA Lending: A Growth Opportunity Body: 17 SBA lenders in 5 States Ranked 24th largest SBA 7(a) Lender in SBA FY 2007 Ranked in the top 5 largest SBA 504 Lenders in SBA FY 2007 Total SBA [504 + 7(a)] = $481 million (39% of total loans O/S) California: $142 million (30% of SBA loans)
Slide 11: SBA Lending By Type
Slide: 11 Title: SBA Lending By Type Body: SBA (7a) Loans: $286 million outstanding at 12/31/07 Primarily consists of unguaranteed portions (guaranteed portions are generally sold). Avg. LTV is 75.2% for majority of loans All require personal guaranties SBA 504 & similar loans: $195 million O/S at 1
Slide 12: SBA Lending Initiatives
Slide: 12 (millions) Hired former president of U.S. Bank’s SBA Division and current chairman of National Association of Government Guaranteed Lenders to head TMCV’s entire SBA program Hired a lending team for SBA 504 loans in 4Q’06 Originated $150 million loans in 2007 Continue to hire loan officers
Slide 13: Real Estate Lending in California: 6 Offices
Slide: 13 Northern California: San Rafael Serves the 9-county Bay Area Southern California: Serves Los Angeles, Orange, Riverside, San Bernardino & San Diego Counties Provides construction financing for: Tract & multi-unit housing Commercial & industrial buildings Retail space Single family resident
Slide 14: 93% of Total Loan Portfolio Supported by Real Estate Loans
Slide: 14 Title: 93% of Total Loan Portfolio Supported by Real Estate Loans Supported by Real Estate = $1.15 Billion, as of Dec. 31, 2007 (Gp:) Owner-Occupied Commercial, 22.55% (Gp:) Non-Owner Occupied Residential, 56.24% (Gp:) Non-Owner Occupied Commercial, 7.57% (Gp:) Land Development, 7.20% (Gp:
Slide 15: Concentrations of Construction Loans
Slide: 15 Title: Concentrations of Construction Loans* $468 Million of Loans O/S in 3 Counties + San Francisco Bay Area at 12/31/07 $36 $136 $166 $130 Exposure by California County (MM) (Gp:) *Balances exclude owner-occupied construction (Gp:) Residential C&D (Gp:) Commercial C&D (Gp:) Land
Slide 16: A Changing Profit Environment
Slide: 16 Title: A Changing Profit Environment Body: 2007 Impacts on Performance: Continued growth in net interest income Net interest margin compressed Write-down of SBA loan servicing assets Decline in gain on sale of loans Increased infrastructure costs: audit, risk mgmt, appraisal dept., cash ma
Slide 17: Shifting the Loan Mix to Sustain Growth
Slide: 17 Title: Shifting the Loan Mix to Sustain Growth Body: 2007 loan growth based on SBA originations Retain more SBA loans in portfolio; lower margined Increased originations higher gains on sale Adding additional lenders and hired new head of SBA Div. Diminishing C&D loans: more selective and
Slide 18: Funding Loan Growth
Slide: 18 Title: Funding Loan Growth Body: Non-maturity accounts provide a low-cost funding base Retail CDs more stable than wholesale Short tenor of loan and deposit portfolios provide opportunities to match-fund with wholesale CDs 69% of deposits reprice within six months 88% of deposits reprice w
Slide 19: Contributions to Net Interest Income
Slide: 19 Title: Contributions to Net Interest Income Margin compression due to higher funding costs and falling loan yields Loan growth from lower margined SBA loans Net interest income up 9.7% over 2006 as 28% loan growth was offset by a 16% margin decline Loans Outstanding Net Interest Margin Net
Slide 20: Net Impact on Revenues
Slide: 20 Title: Net Impact on Revenues Fee income reduced by lower gains on sale and fair market valuation of servicing rights Noninterest Income as % of Total Revenues Total Revenues* * Total Revenues =Net Interest Income + Noninterest Income
Slide 21: Managing the Overhead in a Changing Environment
Slide: 21 Title: Managing the Overhead in a Changing Environment Comfortable with efficiency ratio ~ 60% Declining non-interest income due to write-downs of the servicing assets and lower gain on sale of loans Expenses up from spending on credit and administrative infrastructure, and opening new bra
Slide 22: Risk Management
Slide: 22 Title: Risk Management Body: Staff of 9 in risk management group Flexible balance sheet: $207 million held for sale, able to sell real estate term loans and participate construction loans 92.9% of loans secured by real estate Average loan-to-value for real estate portfolio ~ 65.3% Intensiv
Slide 23: Low Loss Experience Over 10-Year Life of Bank
Slide: 23 Title: Low Loss Experience Over 10-Year Life of Bank * Net NPAs exclude guaranteed portion of SBA loans $4.0 Million in Total Losses over Life of Bank
Slide 24: Net Non-Performing Assets = 1.56%
Slide: 24 Title: Net Non-Performing Assets* = 1.56% Body: Gross NPA = $30.9 MM at 12/31/07 $10.4 MM (33.7%) of NPAs supported by SBA guaranties Majority of NPA secured by 1st lien on RE and personal guaranties Experienced, highly qualified workout team in place; at 12/31/07, net OREO is $zero Antici
Slide 25: LTM Valuation Data as of 12/31/2007
Slide: 25 Title: LTM Valuation Data as of 12/31/2007; Price as of Feb. 15, 2008 = $10.93 1 Peer Criteria = California Region; similar model & asset size ($500M to $2.5B). Comparison is with 20 banks including: VNBC, WIBC, FRGB, CLFC, CCOW, TCBK, PFBC, BSRR, FCAL, NOVB, BMRC, BBNK, UBFO, PPBI, BOCH,
Slide 26: TMCV Investment Highlights
Slide: 26 Title: TMCV Investment Highlights Attractive, high-growth market for community banking in San Diego, Riverside, San Bernardino counties Experienced management team in California and real estate lending Diversification by geography and loan type; current focus on organic SBA loan originatio
Slide 27: Temecula Valley Bancorp Inc.
PL Temecula Valley Bancorp Inc.
Slide 28: SBA Servicing Rights: Lower Retention Levels
Slide: 28 Title: SBA Servicing Rights: Lower Retention Levels (Table from earnings release) Market assumptions for future prepayment speeds and/or discount rates cause swings in the fair value adjustments of servicing rights Decline in servicing rates is a function of selling loans at maximum premiu