W.T.B. Financial Corp. · OTC:WTBFA
W.T.B. Financial — Shareholder Meeting (2017)
33 slides from W.T.B. Financial's shareholder meeting presentation, 2017
Slide 1: 2017 Annual Shareholders' Meeting
2017 ANNUAL SHAREHOLDERS’ MEETING W.T.B. Financial Corporation Our Mission “We will be the best at understanding and meeting the financial needs of our customers. We will focus our unique strengths as a community bank on serving those customers who perceive a distinct value in building long-term rel
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS “This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “exp
Slide 3: Company Overview
COMPANY OVERVIEW W.T.B. FINANCIAL CORPORATION W.T.B. Financial Corporation is the parent company Washington Trust Bank is the primary subsidiary Demographics Shares listed on the OTC Pink Marketplace: www.otc markets.com WTBFA -- Class A shares WTBFB -- Class B shares Over 100 years of banking histo
Slide 4: Core Identity and Business Model
CORE IDENTITY AND BUSINESS MODEL • Pacific Northwest community bank • Over 100 years of heritage • 4th generation Chairman of the Board and CEO • Relationship banking • High value customer relationships • Organic customer growth • Broad product line and customer base • Commercial banking customer fo
Slide 5: Business Model
BUSINESS MODEL • Relationship banking requires… • A high degree of customer focus • High caliber professional bankers • Empowered employees • Decentralized decision-making • First-rate financial solutions • Customized to meet client needs • Standardized to be efficient and scalable • Customers that
Slide 6: 2016 Performance Overview
2016 PERFORMANCE OVERVIEW 2016 FINANCIAL POSITION AND PERFORMANCE Deposit growth of $383 million, or 8.4% drove strong asset growth Assets finished the year at $5.7 billion, up 6.9%, or $364 million Balance Sheet Loans grew $228 million, or 6.4% to $3.8 billion Common shareholders' equity increased
Slide 7: Major Industry Themes
MAJOR INDUSTRY THEMES • Credit recovery from financial crisis is complete • Industry NPA’s to assets < 1.00% (peaked at 3.45% in 2010) • Number of problem institutions = 123 (recent peak of 884 in 2010) • Industry ALLL to loans = 1.30% (WTB = 2.27%) • Low rate environment weighs on profitability • I
Slide 8: 2016 Industry Performance
2016 INDUSTRY PERFORMANCE Industry Earnings: • Industry earnings = $171 billion, up $8 billion, or 4.9% • Net interest revenue increased 6.9% on growth and wider margins • Provision for loan loss expense increased $11 billion, or 28.8% Industry Balance Sheet: • Deposits = $12.9 trillion, up $705 bil
Slide 9: Industry Consolidation Continues
INDUSTRY CONSOLIDATION CONTINUES… 17,886 Number of FDIC Insitutions The number of FDIC insured institutions has declined by nearly 12,000, or 67% to 5,913 since 1984… 5,913 $16,780,224 1984 1987 1988 1991 1992 1993 1995 1996 1997 2000 2001 2004 2005 2006 2008 2009 2010 2012 2013 2014 1985 1986 1989
Slide 10: Impacting the Smallest Banks
IMPACTING THE SMALLEST BANKS Number of Institutions by Asset Size 18,000 • All of the consolidation in the industry has 16,000 come from the smallest banks 14,000 • Banks with assets < $100 million declined by over 12,000, or 89% since 1984… 12,000 • …while banks with assets from $1 billion to $10 b
Slide 11: Problem Bank Levels Normalized
PROBLEM BANK LEVELS NORMALIZED Source: FDIC website as of 4/17/2017 11
Slide 12: Industry Asset Quality Normalized
INDUSTRY ASSET QUALITY NORMALIZED Industry Noncurrent Assets and OREO to Assets 4.00% 3.48% 3.45% 3.50% Problem assets peak for the industry in 2010 3.00% 2.50% 2.00% 1.50% Average NPA’s to Assets = 0.73% (1995 to 2007) 1.00% 0.86% 0.50% 0.47% 0.00% 1984 1985 1988 1989 1991 1992 1995 1998 1999 2002
Slide 13: But Profitability Hasn't Yet...
BUT PROFITABILITY HASN’T YET… Historical (1984 to 2016) Industry Return on Assets (Q) 1.50% 1.39% 1.04% Average ROA of 1.20% Average ROA of (1993 to 2006) 1.03% (2012 to 2016) 0.00% -1.10% -1.10% -1.50% 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20
Slide 14: ...Until Rates Normalize
…UNTIL RATES “NORMALIZE” 10.00% 10-Year UST Treasury Rates 9.08% (1990 to 2016) 8.03% 7.50% 6.75% 5.23% 5.58% 5.00% 5.23% 4.24% 3.98% 3.13% 2.50% 2.45% 2.13% 1.43% 1.37% 0.00% Source: United States Treasury website as of 4/10/2017 14
Slide 15: Industry Performance Comparison
INDUSTRY PERFORMANCE COMPARISON FDIC DATA Washington Banking $1 to $10 Billion COMPARATIVE METRIC: Trust Bank Industry in Assets FINANCIAL PERFORMANCE Actual 4-Quarter Average Comments Net Interest Margin (NIR/Earning Assets) 3.55% 3.13% 3.60% Operating Expenses to Assets 2.80% 2.57% 2.84% Comparabl
Slide 16: FinTech Revolution Well Underway
FINTECH REVOLUTION WELL UNDERWAY 16
Slide 17: Focus on WTBFC Company 2016 Performance in Perspective
FOCUS ON WTBFC COMPANY 2016 PERFORMANCE IN PERSPECTIVE 17
Slide 18: Assets and Capital
ASSETS AND CAPITAL Total Assets (in thousands) $5,669,000 • Assets increased $1.5 billion, or 36% $5,305,000 over past five years $4,470,000 $4,436,000 $4,772,000 • Common equity to assets grew 49 bps to 8.75% since 2012 • Common shareholders’ equity increased $155 million, or 45% over past five yea
Slide 19: Investable Cash and Securities Trends
INVESTABLE CASH AND SECURITIES TRENDS SECURITIES AND INVESTABLE CASH (in millions) $1,711 $1,601 $1,388 $326 $1,251 $439 $1,086 $344 $277 $ $110 % 6.9% $1,360 $1,162 $1,385 Million $809 $907 $ Growth over the % Growth over the Past Year Past Year 2012 2013 2014 2015 2016 Securities Investable Cash $
Slide 20: Deposit Trends
DEPOSIT TRENDS TOTAL DEPOSITS (in Millions) $4,924 $4,541 $4,083 $3,790 $3,793 $ $383 % 8.4% Million $ Growth over the % Growth over the Past Year Past Year 2012 2013 2014 2015 2016 Deposit Mix Noninterest Bearing Demand $2,029 Deposit Type $ (Millions) % of Total Noninterest Bearing Demand $ 2,029
Slide 21: Loan Trends
LOAN TRENDS TOTAL LOANS (in millions) $3,785 $3,557 $3,351 $3,176 $2,897 $ $228 % 6.4% Million $ Growth over the % Growth over the Past Year Past Year 2012 2013 2014 2015 2016 Commercial Real Estate $1,233 Loan Type $ (Millions) % of Total Commercial & Industrial $1,183 Commercial Real Estate $ 1,23
Slide 22: Focus on Capital
FOCUS ON CAPITAL • Capital levels well above regulatory minimums • Profitability trends sufficient to fund growth • Capital ratio trends favorable • Risk profile moderate • Capital quality is high (zero intangible assets) • Balance sheet strength considerable • Share Repurchase July 2016 • Opportuni
Slide 23: Capital Trends
CAPITAL TRENDS SHAREHOLDERS' EQUITY (in thousands) Common Shareholders’ Equity $496,286 $458,271 $464,407 $438,069 $441,598 $89,142 $44,571 $464,407 $496,286 $ $32 % 6.9% $422,027 $369,129 $393,498 Million $ Growth over the % Growth over the Past Year Past Year 2012 2013 2014 2015 2016 Common Shareh
Slide 24: Asset Quality Is High
ASSET QUALITY IS HIGH $50,000 1.50% $46,351 $36,712 The Bank’s asset quality is high In thousands $29,358 1.04% with problem assets 0.83% $18,782 declining significantly 0.62% $15,146 to historically low levels 0.35% 0.27% $- 0.00% 2012 2013 2014 2015 2016 Nonaccrual loans and ORE Nonaccrual loans a
Slide 25: WMAS and Trust: Key Business Line
WMAS AND TRUST: KEY BUSINESS LINE Wealth Management and Advisory Services, including Trust Powers • $4.7 billion portfolio of assets • Managed asset growth of $230 million, or 8.8% • Total asset growth of $331 million, or 7.5% • Fee income based business • Recurring revenue stream • Diversifies reve
Slide 26: Income Statement Trends
INCOME STATEMENT TRENDS Years Ended December 31, Income Statement (000's) 2015 2016 $ Difference % Change Net interest revenue $ 163,801 $ 181,561 $ 17,760 10.8% Provision for loan losses 2,667 2,250 (417) -15.6% Total noninterest revenue 48,857 48,541 (316) -0.6% Total noninterest expense 140,369 1
Slide 27: WTBFC Financial Performance Metrics
WTBFC FINANCIAL PERFORMANCE METRICS For the Year Performance Metric 2015 2016 Difference Return on average assets 0.94% 0.98% 0.04% Return on shareholders’ equity 10.12% 10.53% 0.41% Margin on average earning assets 3.42% 3.53% 0.11% Noninterest expense to average assets 2.83% 2.81% -0.02% Nonintere
Slide 28: Key Shareholder Value Metrics
KEY SHAREHOLDER VALUE METRICS Years Ended December 31, Income (000's) and Per Share Data 2015 2016 $ Difference % Change Net Income $ 46,360 $ 51,727 $ 5,367 11.6% Preferred Stock Dividends 142 - (142) -100.0% Net Income Available to Common Shareholders $ 46,218 $ 51,727 $ 5,509 11.9% Diluted Earnin
Slide 29: WTBFB Historical Returns
WTBFB HISTORICAL RETURNS WTBFC Class B Common Stock Returns 1 Year Returns Valuation Valuation Change Method: YE 2015 YE 2016 Total $'s CAGR % Book Value $ 180.79 $ 193.66 $ 12.87 7.1% Market Close $ 197.99 $ 255.00 $ 57.01 28.8% 3 Year Returns Valuation Valuation Change Method: YE 2013 YE 2016 Tota
Slide 30: Q1 2017 Highlights
Q1 2017 HIGHLIGHTS • Earnings trends continued • Net income $13.0 million, up $817,000, or 6.7% YoY • Earning asset growth and wider margins key drivers • Fed rate moves in December and March drive margin • Credit performance remains high • Capital levels substantial • Equity to assets ratio increas
Slide 31: Outlook ~ 2017 and Beyond
OUTLOOK ~ 2017 AND BEYOND • Uneven economic recovery continues • CB policies (Fed/Global) major force on capital markets • Macro risks and market volatility remain a concern • Our markets are providing opportunities • Regulatory expectations elevated and expensive • Uncertainty around rates…IRR mana
Slide 32: Key Priorities
KEY PRIORITIES • Strength • Maintain balance sheet strength and conservative risk profile • Position for Fed policy shifts/macro events • Adapt and evolve • Shifting “FinTech” landscape • Enhance the customer experience • Excel on electronic/mobile delivery • Discipline • Stay true to relationship b
Slide 33: Your Time Is Valuable to Us
YOUR TIME IS VALUABLE TO US WE APPRECIATE YOUR SUPPORT AND ALWAYS WELCOME CUSTOMER REFERRALS