Midwest Banc — Shareholder Meeting (May 2009)
48 slides from Midwest Banc's shareholder meeting presentation, May 8, 2009
Slide 1: Annual Shareholders' Meeting May 6, 2009
Annual Shareholders' Meeting May 6, 2009 Looking Ahead... ....to a Brighter Tomorrow
Slide 2: Forward Looking Statements
Any oral statements made by representatives of the Company or any written statements contained in any written documents provided at this presentation concerning financial and other projections constitute forward looking statements within the meaning of the Securities Exchange Act of 1934 and are sub
Slide 3: Percy L. Berger, Sr., Chairman of the Board
Percy L. Berger, Sr. Chairman of the Board (2008-Present) Midwest Banc Holdings, Inc.
Slide 4: Agenda
Agenda Election of meeting Chairman and Secretary Introductions Secretary's Report Review and Voting on Business Matters Management Presentation
Slide 5: Introduction of the Board
Introduction of the Board Angelo A. DiPaolo Barry I. Forrester J. J. Fritz Robert J. Genetski Gerald F. Hartley Dennis M. O'Hara Joseph Rizza Thomas Rosenquist E.V. Silveri Monsignor Kenneth Velo
Slide 6: Homer J Livingston, Jr., Former Chairman
Homer J Livingston, Jr. Former Chairman of the Board (2007-2008) Former Director (2005-2008) Midwest Banc Holdings, Inc.
Slide 7: James J. Giancola, Former President & CEO
James J. Giancola Former President & Chief Executive Officer (2005-2009) Midwest Banc Holdings, Inc.
Slide 8: Welcome Former Directors of the Bank and Holding Company
Welcome Former Directors of the Bank and Holding Company
Slide 9: Our Proxy Committee
Our Proxy Committee: Bruno Costa Robert Figarelli Kelly O'Keeffe
Slide 10: Appointment of Meeting Chairman and Secretary
As we begin the business portion of this meeting, I would like to appoint J.J. "Jay" Fritz, President and Chief Executive Officer of Midwest Banc Holdings, Inc., to serve as Chairman of this meeting and Tim Sullivan to serve as Secretary. Motion Vote
Slide 11: 2008 Banking and Economic Overview
2008 Banking and Economic Overview Worst Economic Downturn Since the Great Depression Collapse of Business Activity Financial Markets Ceased to Function
Slide 12: A Different Type of Recession: The Great Depression
A Different Type of Recession The Great Depression Downturn in Spending Downturn in Business Activity Downturn in Quality of Bank Assets Downturn in Bank Lending Business Failures Bank Failures
Slide 13: A Different Type of Recession: 2008-2009
A Different Type of Recession The Recession of 2008-2009 Disruption in Financial Markets Sub-prime Mortgage Debacle Reduced Value of Financial Assets Increased Losses at Financial Institutions Reduced Lending Tight Credit for Business / Consumers Business Failures Reduced Consumer Spending
Slide 14: Economic Outlook for 2009
Economic Outlook for 2009 Continued Decline during the First Quarter Continued Pressure on Bank Capital Encouraging Signs that Financial System is Beginning to Stabilize Recovery Likely Very Late 2009 or in 2010
Slide 15: MBHI Strategy
MBHI Strategy Strengthen Management Team for Long Term Maintain Safe, Sound, and Well-Capitalized Institution Return to Profitability Positioned for Future Growth
Slide 16: Roberto R. Herencia
Roberto R. Herencia 17-year career at Banco Popular most recently president of Banco Popular North America and executive vice president of Popular, Inc. 10 years at First National Bank of Chicago various positions including: deputy senior credit officer for Latin America and head of the emerging mar
Slide 17: Preferred Dividends & Trust Preferreds
Preferred Dividends & Trust Preferreds
Slide 18: J. J. "Jay" Fritz, President & CEO
J. J. "Jay" Fritz President & Chief Executive Officer Midwest Banc Holdings, Inc.
Slide 19: JoAnn Sannasardo Lilek, EVP & CFO
JoAnn Sannasardo Lilek Executive Vice President & Chief Financial Officer Midwest Banc Holdings, Inc.
Slide 20: Brogan M. Ptacin, EVP & Head of Corporate Banking
Brogan M. Ptacin Executive Vice President & Head of Corporate Midwest Bank & Trust Company
Slide 21: Auditor and Corporate Counsel
Kevin Riordan Audit Partner PricewaterhouseCoopers LLP Tim Sullivan Corporate Counsel Hinshaw & Culbertson
Slide 22: Secretary's Report
Tim Sullivan Secretary's Report
Slide 23: Convene Meeting Preliminary Business Items
Jay Fritz Convene Meeting Preliminary Business Items
Slide 24: Looking Ahead... to a Brighter Tomorrow
Looking Ahead... ...to a Brighter Tomorrow
Slide 25: One Final Look in the Rearview Mirror
One Final Look in the Rearview Mirror Last Five Years Management's Response CFO Report 2009 a Bridge to Opportunity
Slide 26: Key Developments: 2004 to 2008
Key Developments: 2004 to 2008 9/04 - Giancola appointment / growth model / $99 million GSE's 8/05 - Raised $72 million in common equity 6/06 - $130 million acquisition of Royal American 12/06 - GSE preferred ownership at low point of $41 million 11/07 - $140 million acquisition of Northwest Suburba
Slide 27: Key Accomplishments
Key Accomplishments... Restored Relationship with Regulators Refocus on Chicago MSA Expand Branch Footprint Strengthened Credit / Service Culture Diversified Loan Portfolio from Real Estate
Slide 28: Were Overshadowed by...
Were Overshadowed by... Collapse of Financial Markets Recurring Credit Quality Issues (LPC; Legacy Loans; Economy) Investment Portfolio Losses / Write-down of Goodwill Inconsistent Earnings
Slide 29: Historical Capital Analysis
Historical Capital Analysis $72 MM Capital Raise -> RABC Acquisition -> NWSB Acquisition -> GSE OTTI-> TARP -> 2003Q4 2004 2006 2008 2007 2005 Chicago Peers (Median): AMFI, FMBI, MBFI, OSBC, PVTB, TAYC, WTFC 10.07%
Slide 30: Historical Capital Analysis
Historical Capital Analysis
Slide 31: Loan Portfolio Transformation
Loan Portfolio Transformation (1) Collateral-based classification. (2) Source of repayment classification. 2004 (1) 2008 (2) $1.1 Billion $2.5 Billion
Slide 32: Historical Credit Quality Analysis
Historical Credit Quality Analysis LPC -> 2003Q4 2004 2006 2008 2007 2005 Chicago Peers (Median): AMFI, FMBI, MBFI, OSBC, PVTB, TAYC, WTFC
Slide 33: Major Items Impacting 2008 Price Performance
Major Items Impacting 2008 Price Performance 1 3/19/08 - FNM & FRE announced initiatives to increase liquidity and raise capital 2 4/03/08 - Significant Transactions (LPC, Bucktown, FHLB advances) 3 4/21/08 - Announced OTTI Charge of $17 million 4 4/29/08 - Announced Q1 loss of ($5.4) million or ($0
Slide 34: Management Responses
Management Responses Retained deposit relationships through difficult business cycle Became first Chicago community bank approved for TARP Enhancing loan workout team Responding to industry wide de-leveraging with new pricing disciplines Shift to "Back to Basics" from Growth Strategy Engaged Fox-Pit
Slide 35: Looking Ahead... to a Brighter Future
Looking Ahead... to a Brighter Future Key Leadership Changes at MBHI: JoAnn Lilek - Chief Financial Officer (3-08) Brogan Ptacin - EVP Head of Corporate Banking (6-08) Jon Gilfillan - EVP Head of Commercial Real Estate (7-08) Susan Moll - SVP Financial Planning & Analysis (7-08) Dave Taylor - EVP He
Slide 36: 2008 & Q1 2009 Financial Review
JoAnn Lilek: 2008 & Q1 2009 Financial Review
Slide 37: 2008 - Year in Review
2008 - Year in Review Year of the Global Financial Crisis MBHI lost $162 million due to three factors: $72 million provision for loan losses $83 million write-down of preferred stock of Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") $8
Slide 38: $72mm Provision for Loan Loss Components
$72mm Provision for Loan Loss Components Reserves @ 12/31/07 2008 Provisions 2008 Charge-offs Reserves @ 12/31/08 2008 Recoveries $56 Million
Slide 39: Asset Quality at 12/31/08
Asset Quality At 12/31/08 MBHI's coverage ratios were inline with peers. Reserves / NPLs Reserves / Loans Chicago Peers: AMFI, FMBI, MBFI, OSBC, PVTB, TAYC, WTFC
Slide 40: Fannie and Freddie
Fannie and Freddie On September 7, 2008, the Government announced the takeover of Fannie and Freddie Approximately 27% of banks owned FNM and FRE preferred securities Of those banks, who owned the GSE preferreds as a percent of tangible capital, MBHI was one of the highest at 32%.
Slide 41: First Quarter 2009
First Quarter 2009 Net interest margin 5% improvement Significant loan and core deposit growth Normalized noninterest expense decreased with cost reduction efforts Credit quality will remain an issue until the economy improves Capital ratios have compressed but Midwest Bank remains well- capitalized
Slide 42: Expense Control Initiatives
Revenue growth > Expense growth No performance bonuses to executive management team 4% reduction in headcount Closing two under-performing branches In-sourcing where it makes sense Reduction in marketing expense Process improvement initiatives Expense Control Initiatives
Slide 43: Goal: Remain Strong for the Future
Goal: Remain Strong for the Future Our goal is to ensure the Company remains strong for a return to a new "normal" banking environment Continued internal stress testing Implementing and evaluating capital conservation opportunities Cost control Top-line Revenue (Millions) Less Provision for Loan Los
Slide 44: 2009 A "Bridge" to Opportunity
2009 A "Bridge" to Opportunity
Slide 45: 2009: A Bridge to Opportunity
2009: A Bridge to Opportunity Provide Smooth Transition for Roberto Herencia Extract Results from 2008-2009 Additions to Talent Base Enhance Chicago Presence "Little Blue Book" - Focus on Customer Service Technology Initiatives - - Profit Enhancement Balance Capital Plan with Corporate Performance C
Slide 46: Final Thoughts
Final Thoughts 50 years in Chicago Chicago 3rd Largest MSA - Great Market Solid Branch Platform A Strong United Team
Slide 47: Results of Voting
Tim Sullivan Results of Voting
Slide 48: Thank You! Questions?
Thank You! Questions?
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