Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Westfield Financial — Griffin Financial Group Boston Investor Meetings (May 2014)
38 slides from Western New England Bancorp's conference presentation, May 28, 2014
Slide 1: Westfield Financial, Inc. Griffin Financial Group Boston Investor Meetings
W ESTFIELD F INANCIAL , I NC . NASDAQ: WFD GRIFFIN FINANCIAL GROUP LLC BOSTON INVESTOR MEETINGS M AY 28, 2014
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
W ESTFIELD F INANCIAL O VERVIEW ▪ A bank holding company headquartered in Westfield, MA with $ 1 . 3 billion in assets, 11 branches throughout Hampden County in western Massachusetts and one banking center in Granby, CT . ▪ Successfully transitioned to a commercial bank model from a legacy mutual th
Slide 4: Branch Footprint
WESTFIELD BRANCH FOOTPRINT FINANCIAL Prioryote + eect Suh
Slide 5: Experienced Commercial Lending Team
E XPERIENCED C OMMERCIAL L ENDING T EAM Years Lending Years with Westfield Bank Prior Experience James Hagan President and CEO 29 19 Fleet Bank Allen Miles EVP and Senior Lender 25 15 Westbank, Bank of New England Commercial Lenders: Dennis Keefe 34 2 Berkshire Bank, Fleet Bank Ted Horan 30 New hire
Slide 6: Strategic Focus and Planning
S TRATEGIC FOCUS AND PLANNING ▪ Focus on strengths while leveraging our excess capital: o continue attracting top bankers and targeting demographically strong high growth; o emphasize organic growth but remain opportunistic with regard to strategic acquisitions; and o Effective deployment of excess
Slide 7: Strategic Focus and Planning (continued)
▪ Emphasis on protecting tangible book value (TBV) as demonstrated by the restructure of the investment portfolio, execution of interest rate swaps, along with elimination of the special dividend. ▪ Active repurchase program has advantage of repurchasing shares below TBV . ▪ Prudent management of no
Slide 8: Active Interest Rate Risk Management
▪ Balanced maturity and repricing schedule of loan portfolio: o 25.1% of loan portfolio due within one year; o 40.6% of loan portfolio due within three years; and o 55.9% of loan portfolio due within five years. ▪ $ 155.0 million notional of float - to - fixed interest rate swaps executed in 2013: o
Slide 9: Capital Management: A Combination of Four Initiatives
C APITAL M ANAGEMENT A C OMBINATION OF F OUR I NITIATIVES ▪ Fund organic growth. ▪ Repurchase shares of our common stock. ▪ Pay dividends to shareholders. ▪ Finance acquisitions. We try to effectively balance capital deployment to earn a return on our shareholders’ investment versus returning the ca
Slide 10: Improved Mix of Interest Earning Assets
I MPROVED MIX OF INTEREST EARNING ASSETS INCREASING LOANS AND REDUCING SECURITIES 10 $ in millions 583 595 596 607 620 637 648 664 636 631 607 558 554 542 $500 $550 $600 $650 $700 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Loans Securities
Slide 11: Stable and Consistent Net Interest Margin
S TABLE AND C ONSISTENT N ET I NTEREST M ARGIN T AX E QUIVALENT B ASIS 11 As of March 31, 2014 1.00% 1.50% 2.00% 2.50% 3.00% 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2.52% 2.47% 2.59% 2.55% 2.62% 2.57% 2.63%
Slide 12: Loan Portfolio Composition
L OAN P ORTFOLIO C OMPOSITION C&I AND O WNER O CCUPIED CRE ACCOUNT FOR 42% OF THE PORTFOLIO $ in millions As of March 31, 2014 12 Owner Occupied CRE $111.1 17% Non Owner Occupied CRE $163.0 25% Consumer Loans $1.5 1% Home equity $35.9 5% Residential Real Estate $203.6 31% Commercial & Industrial $13
Slide 13: Commercial Loan Portfolio by Market Segment
C OMMERCIAL L OAN P ORTFOLIO B Y M ARKET S EGMENT D IVERSIFIED AMONGST A VARIETY OF SEGMENTS 13 $ in millions As of March 31, 2014 Manufacturing $55.7 14% Wholesale Trade $36.5 9% Retail Trade $28.3 7 % Real Estate, Rental & Leasing $142.0 35 % Professional, Scientific & Technical $17.3 4% Education
Slide 14: Granularity of Commercial Loan Relationships
G RANULARITY O F C OMMERCIAL L OAN R ELATIONSHIPS 14 $ in millions As of March 31, 2014 >$ 6 Million & < $12 million $165.7 41% Over $12 million $30.9 7 % Under $6 Million $211.0 52%
Slide 15: Consistently Strong Credit Quality
C ONSISTENTLY S TRONG C REDIT Q UALITY Mar 31, 2014 Dec 31, 2013 Mar 31, 2013 Allowance for loan losses as a 1.17% 1.17% 1.27% percentage of total loans Nonperforming loans as a 0.48% 0.41% 0.50% percentage of total loans Nonperforming assets as a 0.24% 0.20% 0.23% percentage of total assets 15
Slide 16: Commercial Business Lending
(1) As of 03/31/2014 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 17: Price to Tangible Book Value
P RICE TO T ANGIBLE B OOK V ALUE (1) As of 03/31/2014 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 03/31/2014. . . . B UT OUR VALUATION DOES NOT REFLECT OUR STRONG
Slide 18: Focus on Core Deposits
F OCUS ON C ORE D EPOSITS O VER FIVE YEAR PERIOD , TOTAL DEPOSITS GREW $206 MILLION (34.28%), WHILE N ON - MATURITY DEPOSITS GREW $199 MILLION (74.69%). March 31, 2014 March 31, 2009 18 Noninterest checking, 16% Interest - bearing checking, 5% Savings and MMDA, 36% Time, 43% Noninterest checking, 13
Slide 19: 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 *Does not include the Granby Banking Center deposit total which opened June 2013 19 Deposits Market Bank Name Branches 06/30/2013 Share 1 TD Bank National Association 14 1,216,805 19.63% 2 U
Slide 20: Northern Connecticut Banking Center
N ORTHERN C ONNECTICUT B ANKING C ENTER F IRST E NTRY INTO THE C ONNECTICUT M ARKET ▪ Full service banking center in Granby, CT . o Commercial lending reach through North Central Connecticut . o B loomfield, East Granby, Windsor, West Hartford and greater Hartford . o Targeting areas with more afflu
Slide 21: Wealth Management & Insurance: New Source of Noninterest Income
▪ First Quarter 2014 announced the launch of Westfield Wealth Management and Insurance Group. ▪ Formed a strategic alliance with Charter Oak Insurance Agency, a general agency of Massachusetts Mutual Insurance Co. o Charter Oak and Mass Mutual are within the Westfield Bank footprint. o Mass Mutual T
Slide 22: Leveraging Technology
L EVERAGING T ECHNOLOGY M EETING CUSTOMER NEEDS WHILE GAINING OPERATIONAL EFFICIENCIES » We are leveraging technology to fulfill our customers needs for alternative ways to bank. » Cash Recyclers o Improved customer experience – processing speed improves efficiency o Reduced staffing needs » Mobile
Slide 23: Appendix
APPENDIX 23
Slide 24: Total Loans
T OTAL L OANS 24 $ in millions As of March 31, 2014 7.50% CAGR $400 $475 $550 $625 $700 2009 2010 2011 2012 2013 Mar - 14 477 509 554 595 637 648
Slide 25: Quarterly Commercial & Industrial Loan Growth
Q UARTERLY COMMERCIAL & INDUSTRIAL LOAN GROWTH 25 $ in millions $105 $110 $115 $120 $125 $130 $135 $140 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 115 126 127 129 127 136 133 Commercial & Industrial
Slide 26: Quarterly Commercial Real Estate Loan Growth
Q UARTERLY COMMERCIAL REAL ESTATE LOAN GROWTH 26 $ in millions 240 246 243 244 257 264 $0 $50 $100 $150 $200 $250 $300 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 131 133 131 129 143 152 163 109 113 112 115 113 112 111 Owner Occupied CRE Non Owner Occupied CRE 274
Slide 27: Total Deposits
T OTAL D EPOSITS 27 $ in millions As of March 31, 2014 5.96% CAGR $500 $550 $600 $650 $700 $750 $800 $850 2009 2010 2011 2012 2013 Mar - 14 648 700 733 753 817 807
Slide 28: Conservative Securities Portfolio
C ONSERVATIVE S ECURITIES P ORTFOLIO 28 As of March 31, 2014 GSE Mortgage Backed Securities 72.8% New England Municpal Bonds 4.7% Government Sponsored Enterprise Debt 10.3% Equity Securities 1.4% Corporate Bonds 10.8%
Slide 29: Strong Underlying Credit in Securities Portfolio
S TRONG U NDERLYING C REDIT IN S ECURITIES P ORTFOLIO [Lower Medium Investment Grade] 29 As of March 31, 2014 Treasury/Agency 83.1% AAA 0.1% AA & A 11.9% Less than A 3.4% Not Rated 1.5% Treasury/Agency AAA AA & A Less than A Not Rated
Slide 30: Effectively Leveraging Capital
E FFECTIVELY L EVERAGING C APITAL S HAREHOLDERS ’ EQUITY TO ASSETS 30 As of March 31, 2014 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2009 2010 2011 2012 2013 Mar - 14 20.76% 17.85% 17.34% 14.53% 12.01% 11.90%
Slide 31: 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. 31 56,713 33.0% 87,135 50.7% Perce
Slide 32: 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 33: Dividend History
D IVIDEND H ISTORY 33 $0.00 $0.15 $0.30 $0.45 $0.60 $0.75 2008 2009 2010 2011 2012 2013 1Q 13 1Q 14 $0.20 $0.20 $0.22 $0.24 $0.24 $0.24 $0.06 $0.06 $0.40 $0.30 $0.30 $0.30 $0.20 $0.05 $0.05 Regular dividends Special dividends 2008 2009 2010 2011 2012 2013 1Q 13 1Q 14 Regular dividends $0.20 $0.20 $0
Slide 34: Diluted Earnings Per Share
D ILUTED E ARNINGS P ER S HARE 34 As of March 31, 2014 17.23% CAGR $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 2009 2010 2011 2012 2013 Mar - 13 Mar - 14 $0.18 $0.11 $0.22 $0.26 $0.34 $0.08 $0.09
Slide 35: 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) 35 Three Months Ended March 31, December 31, September 30, June 30, March 31, 2014 2013 2013 2013 2013 INTEREST AND DIVIDEND INCOME: Loans $
Slide 36: 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) 36 March 31, December 31, September 30, June 30, March 31, 2014 2013 2013 2013 2013 Cash and cash equivalents $ 21,370 $ 19,742 $ 28,418 $ 15,706 $ 19,183
Slide 37: Other Data
O THER D ATA 37 (1) Three 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 insurance dea
Slide 38: Total Return Performance
T OTAL R ETURN P ERFORMANCE * T HREE Y EAR T OTAL R ETURN V ERSUS SNL T HRIFT I NDEX * Source: SNL Financial, data as of close of business May 6, 2014 . 38 (30.00) (20.00) (10.00) 0.00 10.00 20.00 30.00 05/06/2011 08/06/2011 11/06/2011 02/06/2012 05/06/2012 08/06/2012 11/06/2012 02/06/2013 05/06/201
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