EX-99.1 3 dex991.txt MANAGEMENT PRESENTATION EXHIBIT 99.1 NATIONAL COMMERCE FINANCIAL Salomon Smith Barney Financial Services Conference January 31, 2002 Ernest C. Roessler President And Chief Executive Officer Forward - Looking Statement This presentation constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. A variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. Specifically, historical quarterly, annual, and annualized growth rates are not meant to be used as projections for future performance. National Commerce Financial Corporation does not assume any obligation to update these forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statement. Factors that might cause such a difference include, but are not limited to competition from both financial and non-financial institutions; changes in interest-rates, deposit flows, loan demand and real estate values; changes in legislation or regulation; changes in accounting principles, policies or guidelines; the timing and occurrence (non-occurrence) of transactions and events that may be subject to circumstances beyond the control of NCF; and other economic, competitive, governmental, regulatory and technological factors affecting NCF specifically or the banking industry or economy generally. Growth Story "We have historically viewed NCF as a `smaller cap Fifth Third' in terms of its above-average revenue and EPS growth and its top-tier efficiency and return profile." -Bob Patten UBS Warburg July 19, 2001 National Commerce Financial continues to be recognized as one of the nation's highest performing financial institutions, growing top-line revenue and earnings per share at levels significantly above industry averages 10 Year CAGR Revenue per Share Growth1 10% 10 Year CAGR Cash EPS Growth1 15% /1/Restated for acquisitions Growth Story "In our view, NCF shares represent an outstanding opportunity to upgrade the quality of any bank stock portfolio." - Jon Balkind Fox-Pitt, Kelton October 14, 2001 NCF is positioned to deliver superior returns in 2002 and into the future What makes us different? 1. Significant employee ownership 2. Management incentives tied to results 3. Unique low-cost bank operating platform 4. Footprint covers many of nation's best markets 5. Strong NIM supported by loan/deposit growth 6. Industry leading credit quality 7. Expanding portfolio of niche fee businesses Growth Story "...we feel increasingly confident in NCF's earnings prospects relative to other banks." -Ros Looby CS First Boston December 21, 2001 NCF Growth Targets 2002 Annualized Historical Growth 4Q01 2001 5 Year Target/1/ Growth Growth Growth ------ ---------- ------ ----------- Loans 8% 16% 8% 10% Deposits 5% 23% 5% 7% Fee Income 7% 68% 31% 16% Total Revenue 10% 34% 17% 11% Cash EPS 15% 31% 17% 16% /1/Excludes impact of M&A Key Growth Drivers [GRAPHICS APPEAR HERE] NCF's superior growth results from the balanced management of the following "Key Growth Drivers" Internal Growth De Novo Expansion Acquisitions Alliances Key Performance Drivers Growth is managed and monitored using the following "Key Performance Drivers" 5 Year CAGR Revenue Growth 8% - FITB/1/ 11% - NCF/2/ 5 Year Average Net Interest Margin 3.88% - FITB/1/ 4.39% - NCF/2/ 5 Year Average Net Charge-off Ratio .40% - FITB/1/ .21% - NCF/2/ 5 Year Average Cash Efficiency Ratio 49.3% - FITB/1/ 49.8% - NCF/2/ /1/FITB data supplied by Lehman /2/Restated for acquisitions Bottom Line NCF's objective is to outperform ---------- FITB in every one of these measures! 1. Corporate Overview 2. Traditional Banking 3. Financial Enterprises 4. Peer Performance Comparison 5. Valuation Operating Divisions NATIONAL COMMERCE FINANCIAL [GRAPHIC] Traditional Banking [GRAPHIC] Financial Enterprises Business Mix NCF has a diverse revenue mix of which 32% is non-interest income Revenue/1/ As of December 31, 2001 Banking Interest Income 67% Financial Enterprises 19% Banking Fee Income 14% Revenue Mix/2/ As of December 31 [GRAPHIC APPEARS HERE] /1/Chapter 13 Bankruptcy Trustee is a spread based business and comprises 1 percentage point of Financial Enterprises /2/Restated for acquisitions Employee Commitment Over 80% of eligible employees are NCF shareholders Insider Ownership 22% NCF's management and employee interest is 100% aligned ---- with shareholders Management Compensation "National Commerce has one of the most challenging incentive compensation plans in the industry." - Keith Horowitz Salomon Smith Barney March 30, 2001 Management will receive no bonus in 2002 unless -------- NCF achieves the following performance hurdles Cash Return on Tangible Equity/1/ 22% Cash EPS Growth 14% To pay maximum bonuses, Cash EPS must grow 18% /1/Dependant upon actual capital levels Why Cash? "...investors should focus on Cash Earnings ------------- here as NCF reports the largest difference between New GAAP and Cash EPS..."/1/ -------- /1/Bob Patten UBS Warburg January 18, 2002 New GAAP vs. Cash EPS 2002 Consensus Cash EPS - $1.77 Amortization Add-back/2/ - $.20 2002 Consensus "New GAAP EPS" - $1.57 2002 2002 % Change GAAP Cash P/E P/E/1/ P/E/2/ GAAP/Cash ------ ------ --------- NCF 16.4 14.6 -11% FITB 22.5 22.3 -1% NCF Peers/3/ 21.0 20.9 0% Industry 14.2 14.0 -1% /1/GAAP EPS estimates supplied by First Call /2/Cash EPS adjustment supplied by Lehman /3/NCF Peers=CBH, FITB, SNV, TCB 1. Corporate Overview 2. Traditional Banking 3. Financial Enterprises 4. Peer Performance Comparison 5. Valuation Franchise Strength "SWBT, SBIB, CFR, ZION, NTRS, TCB, WFC, ONE, WB, and NCF are the institutions with the strongest demographic franchises in the country." -Charlie Ernst Putnam Lovell April 2001 NCF targets high-growth Southeastern metropolitan markets [GRAPHIC] 1. Memphis 2. Nashville 3. Knoxville 4. Atlanta/N. Ga. 5. Savannah 6. Greenville/Spartanburg 7. Asheville 8. Charlotte 9. Triad/1/ 10. Triangle/2/ 11. Wilmington 12. Charleston 13. Roanoke 14. Richmond /1/ Greensboro, High Point, Winston-Salem /2/ Raleigh, Durham, Chapel Hill Franchise Strength NCF targets high-growth Southeastern metropolitan markets "SWBT, SBIB, CFR, ZION, NTRS, TCB, WFC, ONE, WB, and NCF are the institutions with the strongest demographic franchises in the country." -Charlie Ernst Putnam Lovell April 2001 [GRAPHIC] National Bank of Commerce First Market Bank CCB Central Carolina Bank CCB Central Carolina Bank National Bank of Commerce National Bank of Commerce National Bank of Commerce National Bank of Commerce Franchise Strength By far, the Southeast is experiencing more in-migration than any other region in the U.S. [GRAPHIC] [ ] Above average % population growth [ ] Below average % population growth 1990 - 2000 Population Growth NCF States 5+MM NCF Markets 3MM Franchise Strength [GRAPHIC] 11 of our 14 markets were recently ranked by Expansion Magazine as one of the 50 "Hottest Cities in America" for business relocation and expansion [GRAPHIC] 9 of our 14 markets were recently ranked by Entrepreneur Magazine as one of the "Best Cities in America" for entrepreneurship [GRAPHIC] 11 of our 14 markets were recently ranked by Inc. Magazine as one of the "Best Cities in America" to start and grow a new business United States Census 2000 [GRAPHIC] - 35 MM people in NCF states - 14 MM people in NCF markets 1990 - 2000 Population Growth Rates ------------ Markets 26% States 18% Nation 13% Expansion [GRAPHIC] Purchase of 37 branch divestitures and associated ATMs in GA, NC, SC and VA to close first quarter 2002. Introduces two new markets; Asheville and Savannah. [GRAPHIC] Adding approximately 10 full-service in-store branches through an alliance with SC based grocery chain Bi-Lo. Supplements the recent Southbanc acquisition. [GRAPHIC] Entering Atlanta with 30 de novo branches inside Kroger. Four additional in-store branches will open in Savannah to support the traditional branches acquired through First Union/Wachovia. Unique Banking Model NCF's unique hub-and-spoke banking model is more cost effective and allows greater access to new and existing customers [GRAPHIC] 42% Efficiency % 25% ROE Current Branches 152 In-store 255 Traditional --- 407 Total Year 2002 Planned De Novo Branches -------- 30-35 In-store 5-10 Traditional ----- 35-45 Total Expansion Case Study First Market Bank In 1997, National Bank of Commerce and local grocer Ukrop's formed Richmond based de novo First Market Bank National Bank of Commerce Ukrop's [GRAPHIC] 160% 58% 39% Loans 48% 33% 25% Deposits N/M 286% 61% P-T Cash Op Inc Strong Deposit Growth 22% Annualized fourth quarter non-interest bearing DDA deposit growth, excluding M&A Deposit growth is driven by the convenience of the hub-and-spoke banking model as well as a focused retail sales strategy [GRAPHIC] N/M 48% 33% 25% First Market 13% 5% 6% 5% NCF 1 Restated for acquisitions Strong Loan Growth NCF has consistently produced above-average and consistent loan growth [GRAPHIC] N/M 160% 58% 39% First Market 13% 12% 10% 8% NCF 1 Restated for acquisitions Commercial Loan Portfolio Commercial Loans As of December 31, 2001 $6 B [GRAPHIC] CRE 53% C&I 45% Leasing 2% . 96% secured . $50 MM house limit . Largest exposure as % of legal lending limit = 21% . $239 M Avg. loan size . No shared national credit exposure . CRE focus is multi-family, small office, & small retail Consumer Loan Portfolio Consumer Loans As of December 31, 2001 $6 B [GRAPHIC] Consumer 48% Mortgage 34% Home Equity 17% Revolving 1% . 98% secured . Minimum acceptable FICO score 650 . Last 12 months Avg. FICO score 720 . $23 M Avg. loan size . No credit card exposure Superior Asset Quality "NCF has routinely scored in the top 10% of regional bank credit quality." -Chris Marinac Robinson Humphrey August 17, 2001 NCF's conservative underwriting of primarily secured loans has resulted in one of the best NCO records in the industry NPAs & NCOs "We expect asset quality measures to remain best in class." -Jason Goldberg Lehman Brothers September 27, 2001 NPAs and NCOs have run significantly lower than peers through a full cycle Non-performing Assets 1991 - Sept. 2001 YTD [GRAPHIC] Industry 1 Net Charge-offs 1991 - Sept. 2001 YTD [GRAPHIC] NCF 2 1 Industry data representing top 20 banks supplied by Lehman 2 Restated for acquisitions Minimal CRE NCOs "The 10 banks we believe have exhibited the strongest proficiency in commercial real estate credit management and possess the wherewithal to maintain relative earnings and asset quality stability in a more challenging economic environment include:"/1/ Table 1: Banks with Proven Commercial Real Estate Credit Management Skill [GRAPHIC] /1/ Taming Yesterday's Cowboys - UBS Warburg - Spring 2001 1. Corporate Overview 2. Traditional Banking 3. Financial Enterprises 4. Peer Performance Comparison 5. Valuation Financial Enterprises "Similar to Fifth Third, National Commerce has shown an affinity for developing new fee based businesses that are likely to be significant growth drivers in the future." -Keith Horowitz Salomon Smith Barney March 30, 2001 NCF's growing portfolio of fee related businesses offers: 1. High returns 2. High earnings growth 3. Stable earnings growth Profitability Mix [GRAPHIC] Transaction Processing Broker / Dealer Consulting Asset Mgmt / Trust [GRAPHIC] Financial Enterprises Net Income ($MM) $12 $11.0 $10 $9.2 $9.6 $9.5 $8 $8.0 $7.7 $6 $4 $2 $0 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 First Mercantile Trust Plan participants increased over 80% in 2001 Provides retirement plan administration, record keeping, and individual investment services to over 2,200 companies nationwide [GRAPHIC] 43% 35% 58% 56% 7% AUM 43% 35% 55% 80% 81% Participants Ch. 13 Bankruptcy Trustee 92 of the nation's 205 trustees choose NCF for processing Provides record keeping, bill payment, and cash management services nationally to Chapter 13 bankruptcy trustees [GRAPHIC] 38% 54% 25% 21% 13% 13% Balances NCBS National Commerce Bank Services, Inc. #1 Your KEY to Retail Bank Distribution Solutions in-store banking NCBS has provided consultant in-store/retail bank internationally consulting internationally to over 300 financial institutions and 50 retailers Distribution Synergies NCF has tremendous referral opportunities in and among its banks and financial enterprise companies Traditional Banking Financial Enterprises [GRAPHIC] [GRAPHIC] Distribution Case Study FIRST Working together, First Mercantile and MERCANTILE NBC Capital Markets significantly TRUST expanded two existing relationships CAPITAL MAKETS [GRAPHIC] GROUP, INC. New First Mercantile Private Label Partners Commerce Community Bank Bank A Existing: - $15 MM sold YTD Existing: - $20 MM company plan Potential: - CBH Small business/ Potential: - small business / middle middle market customers market customers NBC Capital Markets alone serves over 3,000 regional and community banks 1. Corporate Overview 2. Traditional Banking 3. Financial Enterprises 4. Peer Performance Comparison 5. Valuation Performance Comparison "... National Commerce possesses several distinct advantages that should enable it to maintain long- term EPS growth that is noticeably above that of the typical mid-cap bank." -Ed Najarian Merrill Lynch December 14, 2001 4Q01 4Q01 Revenue Growth/1/ Net Interest Margin/1/ [GRAPHIC] [GRAPHIC] 4Q01 4Q01 Net Charge-off Ratio/1/ Cash Efficiency Ratio/1/ [GRAPHIC] [GRAPHIC] /1/Industry data supplied by Lehman; peer data from company earnings releases Profitability 27% 4Q01 Return on Return on Average Tangible Equity/1/ Average Tangible Equity [GRAPHIC] /1/Industry data supplied by Lehman; peer data from company earnings releases Total Shareholder Return/1/ NCF LISTED NYSE NCF FITB S&P Major Regional Banks S&P 500 NCF has proven to be a superior long-term investment [GRAPHIC] Source: Robinson Humphrey /1/With dividends reinvested 1. Corporate Overview 2. Valuation 3. Financial Enterprises 4. Peer Performance Comparison 5. Valuation Valuation 2002 Cash P/E/1/ Based on projected [GRAPHIC} growth rates, 2002 Cash PEG/1/ NCF is 20% to [GRAPHIC] 40% undervalued! First Call Long Term EPS Growth Rate/1/ [GRAPHIC] /1/Industry and peer data supplied by Lehman and First Call