Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Westfield Financial — 2014 Sterne Agee Financial Institutions Investor Conference
38 slides from Western New England Bancorp's conference presentation, Feb 13, 2014
Slide 1: Sterne Agee Financial Institutions Investor Conference 2014
WESTFIELD FINANCIAL, INC. NASDAQ: WFD 2014 STERNE AGEE FINANCIAL INSTITUTIONS INVESTOR CONFERENCE FEBRUARY 12 – 14, 2014
Slide 2: Forward-Looking Statements
FORWARD – 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 limited to, e
Slide 3: Westfield Financial Overview
WESTFIELD FINANCIAL OVERVIEW A bank holding company headquartered in Westfield, MA with $1.3 billion in assets, 11 branches throughout Hampden County in western Massachusetts and a new banking center in Granby, CT. Strong lending culture with historical focus on commercial business lending. oKey dif
Slide 4: Branch Footprint
WESTFIELD BRANCH FOOTPRINT Priovyote =) qa Ma guantestinabisdtowr Chere ss ‘S, west salad | San if Fwindsor
Slide 5: Experienced Commercial Lending Team
EXPERIENCED COMMERCIAL LENDING TEAM 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 Dennis Keefe 34 2 Berkshire Bank, Fleet Bank Ted Horan 30 New hire 4Q 2013 Liberty Bank Ri
Slide 6: Strategic Focus and Planning
STRATEGIC FOCUS AND PLANNING Favorable shift in interest earning assets by way of loan growth with less reliance on investment portfolio. Our markets are experiencing improving business conditions as the economy recovers. Targeting small and mid-sized consumers and businesses, which the large banks
Slide 7: Strategic Focus and Planning
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 where we have taken advantage of repurchasing shares below TBV. Prudent managem
Slide 8: Capital Management: A Combination of Four Initiatives
CAPITAL MANAGEMENT A COMBINATION OF FOUR INITIATIVES Fund organic growth. Repurchase shares of our common stock. Pay dividends to shareholders. Finance acquisitions. We try to effectively balance leveraging our capital to earn a return on our shareholders’ investment versus returning the capital dol
Slide 9: Creating a Favorable Shift by Increasing Loans and Reducing Securities
CREATING A FAVORABLE SHIFT BY INCREASING LOANS AND REDUCING SECURITIES 9 $ in millions 582.7 594.9 596.3 606.6 620.2 637.4 664.4 635.8 631.4 606.7 557.6 553.8 500.0 550.0 600.0 650.0 700.0 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Loans Securities
Slide 10: Stable and Consistent Net Interest Margin
STABLE AND CONSISTENT NET INTEREST MARGIN TAX EQUIVALENT BASIS 10 As of December 31, 2013 1.00% 1.50% 2.00% 2.50% 3.00% 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 2.52% 2.47% 2.59% 2.55% 2.62% 2.57% 2.57%
Slide 11: Loan Portfolio Composition
LOAN PORTFOLIO COMPOSITION C&I AND OWNER OCCUPIED CRE ACCOUNT FOR 39% OF THE PORTFOLIO $ in millions As of December 31, 2013 11 Owner Occupied CRE $112.5 18% Non-Owner Occupied CRE $151.9 24% Consumer Loans $2.6 1% Home Equity $35.4 5% Residential Real Estate $198.7 31% Commercial & Industrial $135.
Slide 12: Commercial Loan Portfolio by Market Segment
COMMERCIAL LOAN PORTFOLIO BY MARKET SEGMENT DIVERSIFIED AMONGST A VARIETY OF SEGMENTS 12 $ in millions As of December 31, 2013 Manufacturing $54.9 14% Wholesale Trade $37.2 9% Retail Trade $27.8 7% Real Estate, Rental & Leasing $134.0 33% Professional, Scientific & Technical $28.3 7% Educational & H
Slide 13: Granularity of Commercial Loan Relationships
GRANULARITY OF COMMERCIAL LOAN RELATIONSHIPS 13 $ in millions As of December 31, 2013 $6 Million & < $12 million $147.5 37% Over $12 million $31.2 8% Under $6 Million $221.4 55%
Slide 14: Consistently Strong Credit Quality
CONSISTENTLY STRONG CREDIT QUALITY Dec 31, 2013 Dec 31, 2012 Allowance for loan losses as a 1.17% 1.31% percentage of total loans Nonperforming loans as a 0.41% 0.51% percentage of total loans Nonperforming assets as a 0.20% 0.31% percentage of total assets 14
Slide 15: Commercial Business Lending: C&I Loans as % of Total Loans
(1) As of 9/30/2013 or the most recent quarter for which regulatory filings are available; excludes NBN which has unique business plan Source: SNL Financial COMMERCIAL BUSINESS LENDING C&I Loans as % of Total Loans All public banks in New England between $500 million and $5 billion in total assets (
Slide 16: Price to Tangible Book Value
PRICE TO TANGIBLE BOOK VALUE (1) As of 12/31/2013 or the most recent quarter for which regulatory filings are available; excludes NBN which has unique business plan Source: Company SEC filings and call reports; stock prices as of 01/31/2014. BUT OUR VALUATION DOES NOT REFLECT OUR STRONG COMMERCIAL P
Slide 17: Focus on Core Deposits
FOCUS ON CORE DEPOSITS IN THIS FIVE YEAR PERIOD, TOTAL DEPOSITS GREW $229 MILLION (38.96%), WHILE NON-MATURITY DEPOSITS GREW $215 MILLION (82.26%). December 31, 2013 December 31, 2008 Non interest checking, 9% Interest-bearing checking, 14% Savings and MMDA, 21% Time, 56 17
Slide 18: Our Current Deposit Market
OUR CURRENT DEPOSIT MARKET CITIES & TOWNS WHERE WE HAVE BRANCHES* $ in thousands Source: SNL Financial *Does not include the Granby Banking Center deposit total which opened June 2013 18 Deposits Market Bank Name Branches 06/30/2013 Share TD Bank National Association United Bank 1,216,805 19.63% Peo
Slide 19: Northern Connecticut Banking Center, Granby, CT
NORTHERN CONNECTICUT BANKING CENTER GRANBY, CT First entry into the Connecticut Market. Full service banking center in the Farmington Valley area. Commercial lending reach through North Central Connecticut Bloomfield, East Granby, Windsor, West Hartford and greater Hartford. Targeting areas with mor
Slide 20: Granby Target Areas
GRANBY TARGET AREAS The map shows the market 3, 5, and 10 miles from the Granby banking center 20
Slide 21: Wealth Management & Insurance
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. Charter Oak and Mass Mutual are within the Westfield Bank footprint. Mass Mutual Trust is
Slide 22: Leveraging Technology
LEVERAGING TECHNOLOGY We are leveraging technology to fulfill our customers needs for alternative ways to bank. Mobile App for iPhone, iPad & Android introduced in 2012 Customers can also view account balances and transaction history, transfer money between accounts and pay bills all from their smar
Slide 23: Appendix
APPENDIX 23
Slide 24: Total Loans
TOTAL LOANS 5.8% CAGR 24 350 400 450 500 550 600 650 2008 2009 2010 2011 2012 2013 481 477 509 554 595 637 $ in millions As of December 31, 2013
Slide 25: Quarterly Commercial & Industrial Loan Growth
Commercial & Industrial QUARTERLY COMMERCIAL REAL ESTATE LOAN GROWTH 26 $ in millions 0.0 50.0 100.0 150.0 200.0 250.0 300.0 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 131 133 131 129 143 152 109 113 112 115 114 112
Slide 26: Quarterly Commercial Real Estate Loan Growth
QUARTERLY COMMERCIAL REAL ESTATE LOAN GROWTH 26 $ in millions 0.0 50.0 100.0 150.0 200.0 250.0 300.0 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 131 133 131 129 143 152 109 113 112 115 114 112 Owner Occupied CRE Non Owner Occupied CRE 240 246 243 244 257 264
Slide 27: Total Deposits
TOTAL DEPOSITS 27 $ in millions As of December 31, 2013 450 500 550 600 650 700 750 800 850 2008 2009 2010 2011 2012 2013 588 648 700 733 753 817 6.8% CAGR
Slide 28: Conservative Securities Portfolio
CONSERVATIVE SECURITIES PORTFOLIO 28 $ in millions As of December 31, 2013 GSE Mortgage Backed Securities 73.4% New England Municipal Bonds 4.9% Government Sponsored Enterprise Debt 10.1% Equity Securities 1.4% Corporate Bonds 10.2%
Slide 29: Strong Underlying Credit in Securities Portfolio
STRONG UNDERLYING CREDIT IN SECURITIES PORTFOLIO [Lower Medium Investment Grade] 29 As of December 31, 2013 Treasury/Agency 83.5% AAA 0.1% AA & A 12.4% Less than A 2.6% Not Rated 1.4% Treasury/Agency AAA AA & A Less than A Not Rated
Slide 30: Effectively Leveraging Capital
EFFECTIVELY LEVERAGING CAPITAL SHAREHOLDERS’ EQUITY TO ASSETS As of December 31, 2013 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2008 2009 2010 2011 2012 2013 23.4% 20.7% 17.8% 17.3% 14.5% 12.0%
Slide 31: Capital Management: Cumulative Return of Capital
CAPITAL MANAGEMENT CUMULATIVE RETURN OF CAPITAL SINCE SECOND STEP CONVERSION On September 12, 2013, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to 1,037,000 shares, or 5% of its outstanding common stock. 31 28,428 16.6% 56,713 33.0% Percentage
Slide 32: Effective Price Execution of Repurchases
EFFECTIVE PRICE EXECUTION OF REPURCHASES SHARES REPURCHASED BY QUARTER AND P/TBV OF REPURCHASES 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 increasing tang
Slide 33: Dividend History
EFFECTIVE PRICE EXECUTION OF REPURCHASES SHARES REPURCHASED BY QUARTER AND P/TBV OF REPURCHASES 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 increasing tang
Slide 34: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE 34 As of December 31, 2013 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 2008 2009 2010 2011 2012 2013 $0.22 $0.18 $0.11 $0.22 $0.26 $0.34 9.1% CAGR
Slide 35: Consolidated Statements of Income
For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 2012 INTEREST AND DIVIDEND INCOME: Loans $ 6,458 $ 6,371 $ 6,307 $ 6,271 $ 6,369 Securities 3,594 3,954 3,917 4,057 4,228 Other investments – at cost 33 20 21 19 23 Federal funds sold, interest-
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) December 31, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 2012 Cash and cash equivalents $ 19,742 $ 28,418 $ 15,706 $ 19,183 $ 11,761 S
Slide 37: Other Data
OTHER DATA Return on average assets (1) 0.57% 0.49% 0.49% 0.56% 0.47% Return on average equity (1) 4.61% 3.96% 3.66% 3.97% 3.09% Efficiency ratio (2) 75.27 77.58 78.78 75.52 75.68 Net interest margin 2.57% 2.62% 2.55% 2.59% 2.47% 30- 89 day delinquent loans $ 3,459 $ 1,860 $ 1,438 $ 1,919 $ 1,162 No
Slide 38: Total Return Performance
TOTAL RETURN PERFORMANCE * THREE YEAR TOTAL RETURN VERSUS SNL THRIFT INDEX * Source: SNL Financial, data as of close of business January 31, 2014. 38 (30.00) (20.00) (10.00) 0.00 10.00 20.00 30.00 01/31/2011 04/30/2011 07/31/2011 10/31/2011 01/31/2012 04/30/2012 07/31/2012 10/31/2012 01/31/2013 04/3
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