Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Westfield Financial — Investor Presentation (November 2014)
34 slides from Western New England Bancorp's investor presentation, Nov 18, 2014
Slide 1: Westfield Financial, Inc. Investor Presentation
W ESTFIELD F INANCIAL , I NC . NASDAQ: WFD I NVESTOR P RESENTATION
Slide 2: Forward-Looking Statements
F ORWARD – LOOKING STATEMENTS Today’s presentation may contain forward - looking statements, which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential . ” Examples of forward - looking statements include, but are not limite
Slide 3: Westfield Financial Overview – Who We Are
W ESTFIELD F INANCIAL O VERVIEW – W HO W E A RE ▪ A bank holding company headquartered in Westfield, MA with $ 1 . 3 billion in assets and 13 branches throughout western Massachusetts and northern Connecticut, including a branch in Enfield, Connecticut which opened in November . ▪ Successfully trans
Slide 4: Westfield Financial Overview – Corporate Summary
W ESTFIELD F INANCIAL O VERVIEW – W HO W E A RE C ORPORATE S UMMARY Westfield Financial, Inc. – NASDAQ (WFD) Corporate Headquarters – Westfield, MA Third quarter 2014, established a commercial lending hub for our middle market and commercial real estate lending teams located in downtown Springfield,
Slide 5: Commercial Lending Team with Regional Bank Experience
C OMMERCIAL L ENDING T EAM WITH R EGIONAL B ANK E XPERIENCE Years Lending Years with Westfield Bank Prior Experience James Hagan President and CEO 30 20 Fleet Bank, Bank of New England Allen Miles EVP and Senior Lender 26 16 Westbank, Bank of New England Commercial Lenders: Dennis Keefe 35 3 Berkshi
Slide 6: Market Overview
M ARKET O VERVIEW 6 Source: (1) Knowledge Corridor website; (2) Masslive website Big Concentrated Market (1) Nation’s 20 th largest metro region, with 2.77 million people, ranks ahead of Denver and St. Louis. Robust Business Sectors (1 ) Key areas of excellence, focus and investment include: • Finan
Slide 7: Market Overview
M ARKET Overview 7 Source: (1) United States Census Bureau; (2) United States Department of Labor • Third quarter 2014 - relocated middle market commercial lending team to Springfield, MA to provide better access to key markets and centers of influence. This will create better synergies for business
Slide 8: We Are Executing Our Strategy
W E A RE E XECUTING O UR S TRATEGY • Favorable shift in interest earning assets by way of loan growth with less reliance on investment portfolio. o For the twelve months ended September 30, 2014, loans grew by $99.4 million, or 16.0%, while investments have decreased by $46.7 million, or 9.1%. • Tar
Slide 9: We Are Executing Our Strategy
W E A RE E XECUTING O UR S TRATEGY • Capital management strategies with emphasis on growing TBV versus returning the capital dollar - for - dollar in repurchases and dividends. o TCE/TA of 11.0% as of September 30, 2014 down from 29.0% at December 31, 2006. o 1.9 million shares repurchased below TBV
Slide 10: Improved Mix of Interest Earning Assets
I MPROVED MIX OF INTEREST EARNING ASSETS I NCREASING LOANS AND REDUCING SECURITIES 10 $ in millions 595 596 607 620 637 648 686 720 636 631 607 558 554 542 496 511 $450 $500 $550 $600 $650 $700 $750 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Loans Securities
Slide 11: Loan Portfolio Composition
L OAN P ORTFOLIO C OMPOSITION $ in millions As of September 30, 2014 11 Owner Occupied CRE $110.2 15% Non - Owner Occupied CRE $176.8 25% Consumer Loans $1.5 1% Home equity $39.5 5% Residential Real Estate $226.0 31% Commercial & Industrial $165.6 21%
Slide 12: Commercial Loan Portfolio
C OMMERCIAL L OAN P ORTFOLIO 12 $ in millions As of September 30, 2014 Granularity of commercial loan relationships >$5 million & < $10 million $148.3 33% Over $10 million $132.2 29% Under $5 million $172.0 38% Diversified amongst a variety of segments Manufacturing $58.0 13% Wholesale Trade $47.9 1
Slide 13: Our Current Deposit Market
O UR C URRENT D EPOSIT M ARKET C ITIES & T OWNS WHERE WE HAVE BRANCHES $ in thousands Source: SNL Financial (1) - Does not include the Granby Banking Center deposit total which opened June 2013 13 Deposits Market Bank Name Branches 06/30/2014 Share 1 TD Bank National Association 13 978,311 15.87% 2
Slide 14: Commercial Business Lending
(1) As of 09/30/2014 or the most recent quarter for which regulatory filings are available ; excludes NBN which has unique business plan Source: SNL Financial C OMMERCIAL B USINESS L ENDING C&I Loans as % of Total Loans All public banks in New England between $500 million and $5 billion in total ass
Slide 15: Consistently Strong Credit Quality
C ONSISTENTLY S TRONG C REDIT Q UALITY Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Allowance for loan losses as a percentage of loans 1.07% 1.17% 1.17% 1.17% 1.18% Nonperforming loans as a percentage of total loans 1.23% 0.47% 0.48% 0.41% 0.47% Nonperforming assets as a percentage of total assets 0.68%
Slide 16: Focus on Core Deposits
F OCUS ON C ORE D EPOSITS O VER FIVE YEAR PERIOD , TOTAL DEPOSITS GREW $175 MILLION (26.75%), WHILE N ON - MATURITY DEPOSITS GREW $173 MILLION (55.62%) September 30, 2014 September 30, 2009 16 Noninterest checking, 12% Interest - bearing checking, 13% Savings and MMDA 22% Time 53% Noninterest checki
Slide 17: Stable and Consistent Net Interest Margin
S TABLE AND C ONSISTENT N ET I NTEREST M ARGIN T AX E QUIVALENT B ASIS 17 As of September 30, 2014 1.00% 1.50% 2.00% 2.50% 3.00% 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 2.55% 2.62% 2.57% 2.63% 2.61% 2.58%
Slide 18: Price to Tangible Book Value
P RICE TO T ANGIBLE B OOK V ALUE (1) As of 09/30/2014 or the most recent quarter for which regulatory filings are available; excludes NBN which has unique bu sin ess plan Source: Company SEC filings and call reports; stock prices as of 11/12/2014. . . . B UT OUR VALUATION DOES NOT REFLECT OUR STRONG
Slide 19: Why Invest in Westfield Financial
W HY I NVEST IN W ESTFIELD F INANCIAL • Stock trading below tangible book . • Experienced, disciplined regional leadership team. • Continued opportunities for organic growth. • Expansion into demographically attractive markets. • Improving mix of interest earning assets. • High credit quality. • Bal
Slide 20: Appendix
APPENDIX 20
Slide 21: Active Interest Rate Risk Management
▪ Balanced maturity and repricing schedule of loan portfolio: o 24.5% of loan portfolio due within one year; o 39.7% of loan portfolio due within three years; and o 56.1% of loan portfolio due within five years. ▪ $ 155.0 million notional of float - to - fixed interest rate swaps executed in 2013: o
Slide 22: Loan Portfolio
L OAN P ORTFOLIO 22 $ in millions As of September 30, 2014 264 274 286 287 C OMMERCIAL R EAL E STATE C OMMERCIAL L OANS T OTAL L OANS 8.40% CAGR $350 $400 $450 $500 $550 $600 $650 $700 $750 2009 2010 2011 2012 2013 Sep-14 477 509 554 595 637 720 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 Q4 2013 Q1
Slide 23: Total Deposits
T OTAL D EPOSITS 23 $ in millions As of September 30, 2014 4.74% CAGR $400 $450 $500 $550 $600 $650 $700 $750 $800 $850 2009 2010 2011 2012 2013 Sep-14 648 700 733 753 817 829
Slide 24: Securities Portfolio Breakdown
S ECURITIES P ORTFOLIO B REAKDOWN 24 As of September 30, 2014 S TRONG U NDERLYING C REDIT IN S ECURITIES P ORTFOLIO C ONSERVATIVE S ECURITIES P ORTFOLIO GSE Mortgage Backed Securities 70.2% New England Municpal Bonds 4.9% Government Sponsored Enterprise Debt 12.6% Equity Securities 1.5% Corporate Bo
Slide 25: Effectively Leveraging Capital
E FFECTIVELY L EVERAGING C APITAL S HAREHOLDERS ’ EQUITY TO ASSETS 25 As of September 30, 2014 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2009 2010 2011 2012 2013 Sep-14 20.76% 17.85% 17.34% 14.54% 12.07% 11.00%
Slide 26: Capital Management – Cumulative Return of Capital
C APITAL M ANAGEMENT C UMULATIVE R ETURN OF C APITAL S INCE S ECOND S TEP C ONVERSION On March 13, 2014, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to 1,970,000 shares, or 10% of its outstanding common stock. 26 56,713 33.0% 87,135 50.7% Perc
Slide 27: Effective Price Execution of Repurchases
E FFECTIVE P RICE E XECUTION OF R EPURCHASES S HARES R EPURCHASED BY Q UARTER AND P/TBV OF R EPURCHASES The lower the price, the more active WFD has been in its repurchase activity. By repurchasing significant numbers of shares below TBV, WFD has BOTH right - sized its capital level while ALSO incre
Slide 28: Dividend History
D IVIDEND H ISTORY 28 $0.00 $0.20 $0.40 $0.60 2008 2009 2010 2011 2012 2013 3Q 2013 3Q 2014 $0.20 $0.20 $0.22 $0.24 $0.24 $0.24 $0.18 $0.18 $0.40 $0.30 $0.30 $0.30 $0.20 $0.05 $0.05 Regular dividends Special dividends 2008 2009 2010 2011 2012 2013 3Q 2013 3Q 2014 Regular dividends $0.20 $0.20 $0.22
Slide 29: Diluted Earnings Per Share
D ILUTED E ARNINGS P ER S HARE 29 As of September 30, 2014 17.23% CAGR $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 2009 2010 2011 2012 2013 Jan - Sept 2013 Jan - Sept 2014 $0.18 $0.11 $0.22 $0.26 $0.34 $0.24 $0.25
Slide 30: Consolidated Statements of Income and Other Data
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income and Other Data (Dollars in thousands, except share and per share data) (Unaudited) 30 Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, 2014 2014 2014 2013 2013 2
Slide 31: Consolidated Balance Sheets and Other Data
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets and Other Data (Dollars in thousands, except per share data) ( Unaudited) 31 September 30, June 30, March 31, December 31, September 30, 2014 2014 2014 2013 2013 Cash and cash equivalents $ 14,429 $ 39,362 $ 21,370 $ 19,742 $ 28,
Slide 32: Other Data
O THER D ATA 32 ( 1) Three and six months results have been annualized. ( 2) The efficiency ratio represents the ratio of operating expenses divided by the sum of net interest and dividend income and noninterest income, excluding gain and loss of the sale of securities, gain on bank - owned life ins
Slide 33: Non-GAAP Financial Measures
N ON - GAAP F INANCIAL M EASURES 33 WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED NET INCOME TO GAAP PRETAX NET INCOME - UNAUDITED (Dollars in thousands) Quarter Ended Nine Months Ended September 30, September 30, 2014 2013 Change 2014 2013 Change Income before income taxes $
Slide 34: Total Return Performance
T OTAL R ETURN P ERFORMANCE T HREE Y EAR T OTAL R ETURN V ERSUS SNL T HRIFT I NDEX (1) - ) Source: SNL Financial, data as of close of business November 12, 2014 . 34 (30.00) (20.00) (10.00) 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 11/11/2011 02/11/2012 05/11/2012 08/11/2012 11/11/2012 02
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