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| 8-K - FORM 8-K - CFS BANCORP INC | f8k_042511.htm |
EXHIBIT 99.1
Welcome to the
CFS Bancorp, Inc.
2011 Annual Meeting
CFS Bancorp, Inc.
2011 Annual Meeting
Thomas F. Prisby
Chairman & CEO
Chairman & CEO
This presentation contains certain forward-looking statements and information
relating to the Company that is based on the beliefs of management as well as
assumptions made by and information currently available to management. These
forward-looking statements include but are not limited to statements regarding
successful execution of the Company’s strategy and its Strategic Growth and
Diversification Plan, current regulatory capital and equity ratios, diversification of
the loan portfolio, deepening client relationships, levels of core deposits, non-
performing asset levels, credit-related costs, revenue growth and levels of earning
assets, general economic and competitive conditions nationally and within its core
market area, cost savings initiatives, levels of provision for the allowance for loan
losses and charge-offs, loan and deposit growth, interest on loans, asset yields
and cost of funds, net interest income, net interest margin, non-interest income,
non-interest expense, interest rate environment, and other risk factors identified
in the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2010, and other filings with the Securities and Exchange Commission. In
addition, the words “anticipate,” “believe,” “estimate,” “expect,” “indicate,”
“intend,” “should,” and similar expressions, or the negative thereof, as well as
statements that include future events, tense, or dates, or are not historical or
current facts, as they relate to the Company or the Company’s management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties, assumptions, and changes in circumstances. Forward-
looking statements are not guarantees of future performance or outcomes, and
actual results or events may differ materially from those included in these
statements. The Company does not intend to update these forward-looking
statements unless required to under the federal securities laws.
relating to the Company that is based on the beliefs of management as well as
assumptions made by and information currently available to management. These
forward-looking statements include but are not limited to statements regarding
successful execution of the Company’s strategy and its Strategic Growth and
Diversification Plan, current regulatory capital and equity ratios, diversification of
the loan portfolio, deepening client relationships, levels of core deposits, non-
performing asset levels, credit-related costs, revenue growth and levels of earning
assets, general economic and competitive conditions nationally and within its core
market area, cost savings initiatives, levels of provision for the allowance for loan
losses and charge-offs, loan and deposit growth, interest on loans, asset yields
and cost of funds, net interest income, net interest margin, non-interest income,
non-interest expense, interest rate environment, and other risk factors identified
in the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2010, and other filings with the Securities and Exchange Commission. In
addition, the words “anticipate,” “believe,” “estimate,” “expect,” “indicate,”
“intend,” “should,” and similar expressions, or the negative thereof, as well as
statements that include future events, tense, or dates, or are not historical or
current facts, as they relate to the Company or the Company’s management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties, assumptions, and changes in circumstances. Forward-
looking statements are not guarantees of future performance or outcomes, and
actual results or events may differ materially from those included in these
statements. The Company does not intend to update these forward-looking
statements unless required to under the federal securities laws.
Economic Environment
Weak housing markets
Large inventory of unsold properties
High local unemployment
Rising energy costs
Constrained small business growth
Weak government policy
State taxation and budget issues
Banking industry consolidation through
closures and mergers
closures and mergers
Dodd-Frank Act
Signed into law July 21, 2010
800+ page document
Will result in an estimated 5,000 pages of new
legislation
legislation
Regulatory Environment
Office of Thrift Supervision to be consolidated
into the Office of the Comptroller of the
Currency on July 21, 2011
into the Office of the Comptroller of the
Currency on July 21, 2011
Examination costs and deposit insurance
premiums have increased from $400,000 in
2008 to $2.5 million in 2010
premiums have increased from $400,000 in
2008 to $2.5 million in 2010
Right People in the Right Place
Leadership
Organization
Technology Tools
Sales Management
Performance Training
Strategic Growth & Diversification
Four Key Long-Term Objectives
Reduce non-performing assets
Align costs with anticipated future asset base
Grow while diversifying by targeting small
and mid-sized business owners for
relationship banking opportunities
and mid-sized business owners for
relationship banking opportunities
Expand and deepen relationships with clients
Stock Performance
Sources: SNL, Bloomberg
4/21/2011
4/21/2011
Stock Performance
Sources: SNL, Bloomberg
4/21/2011
4/21/2011
Stock Performance
Sources: SNL, Bloomberg
4/21/2011
4/21/2011
Value Perspective
Business transformation well underway
Experienced management team in place
Executing on Strategic Growth & Diversification Plan
Significant insider ownership aligned with shareholders
NEOs & Directors: 16.4%
401(k) Plan: 8.8%
Valuation Opportunity
Substantial discount to tangible book value per
share
share
2011 Best Place to Work
Daryl D. Pomranke
President & COO
President & COO
Strategic Growth & Diversification
Four Key Long-Term Objectives
Reduce non-performing assets
Align costs with anticipated future asset base
Grow while diversifying by targeting small and
mid-sized business owners for relationship banking
opportunities
opportunities
Expand and deepen the Company’s relationships
with its clients by meeting a higher percentage of
the client’s financial needs
with its clients by meeting a higher percentage of
the client’s financial needs
Execution Status of the Strategic
Growth & Diversification
Growth & Diversification
Continue to execute the plan
Major investments in people and
infrastructure complete
infrastructure complete
Performance management system fully
implemented in the sales business units
implemented in the sales business units
Investor presentations conducted with large
current shareholders, prospective
shareholders, and all employees
current shareholders, prospective
shareholders, and all employees
Reduce Non-Performing Assets
Syndications & Purchased Loans
Retail & Commercial direct originations have held up well
Never originated Subprime, Alt-A, or Option ARMs
Non-Performing Assets
Non-Performing Loans vs. OREO
Ongoing NPA Remediation
Proactive Problem Asset Management
Weekly review of delinquencies by Asset
Management Committee
Management Committee
Action plan review for all loans graded watch or worse
Impairment analysis prepared quarterly on all NPLs
greater than $750,000
greater than $750,000
Loan grade validation for all loans 30-days past due
All performing past due loans reviewed
Monthly management reports prepared for Board of
Directors
Directors
Improved Credit/Underwriting Process
Hired new SVP Senior Credit Officer in
December 2007
December 2007
Hired new VP Credit Manager in July 2008
4 new Credit Analysts added since December
2007
2007
New Credit Policy implemented in early 2008
Developed new loan grading matrix utilizing
objective attribute analysis in mid-2009
objective attribute analysis in mid-2009
# of
NPAs -91
NPAs -91
128
138
124
6
8
3
Align Cost Structure
Improve Efficiency Ratio
Overall FTE headcount reduced from 360 in 2006 to 322 currently
Cost reduction initiatives targeting $1.2 million of core expenses
Operating contract negotiations
Salary freeze 2010
Paper to electronic statement conversion
Operations Center relocation/consolidation
Remote Deposit Capture
Construction of three new branches postponed
Review opportunities for additional ancillary fee income sources
(e.g. mortgage banking, wealth management)
(e.g. mortgage banking, wealth management)
Grow While Diversifying
Growth Results in Targeted Segments
62% increase in targeted growth segments since Q1 2007
C&I increased 134%
Multifamily increased 72%
Owner Occupied CRE increased 28%
Strategic Shift in Portfolio
31% reduction in targeted shrinkage segments since Q1 2007
Commercial participation loans reduced 72%
Commercial construction & development loans reduced 64%
Results of Commercial Loan Portfolio
Diversification Plan
Diversification Plan
Targeted Growth segments are up from 30%
to 51% of the portfolio
to 51% of the portfolio
Targeted Shrinkage categories are down from
70% to 49% of the portfolio
70% to 49% of the portfolio
Expand and Deepen Relationships
Focus on Business Relationships
Business Banking Group reorganized to drive
growth
growth
New EVP Sales Management hired in 2008
14 new Relationship Managers hired
Average tenure of 20+ years
Expertise in C&I and Multifamily lending
Regional partnerships formed between Retail
and Business Banking teams with shared goals
and incentives
and Business Banking teams with shared goals
and incentives
Performance Management Program
Power of Personal Performance (PoPP)
Primary focus on sales activities and behaviors
Utilization of balance scorecards to track
activities
activities
Coaching sessions, check-ins, skill builders,
and skip coaching
and skip coaching
Improved outcomes and employee
satisfaction
satisfaction
Focus on Business Relationships
Focus on small-sized and medium-sized
businesses
businesses
Significantly grow C&I relationships
Increase Multifamily and Owner-Occupied CRE as
a share of Commercial Loans
a share of Commercial Loans
Increase business deposits to generate
relationships and fund growth
relationships and fund growth
IT platform provides competitive advantage in
Cash Management opportunities
Cash Management opportunities
Focus on Business Relationships
Proactive prospecting
Feet on the street - experienced teams now
in their markets
in their markets
Trusted Advisor approach vs. transactional
lending
lending
Incentives more heavily weighted for
deposit gathering vs. loan production
deposit gathering vs. loan production
Non-Municipal Business Deposits
Total Deposits
Total Borrowed Funds
Impact of Core Deposits
Path Forward
Continue execution of Strategic Growth &
Diversification Plan
Diversification Plan
Focus on Northwest Indiana and South
Suburban Chicago markets
Suburban Chicago markets
Experienced senior management, sales, and
credit teams in place
credit teams in place
Improving reputation in our markets as business
bankers
bankers
Ongoing bank consolidation provides growth
opportunities
opportunities
Thomas F. Prisby
Chairman & CEO
Chairman & CEO
