W.t.b. Financial Corp. · OTC:WTBFA
W.t.b. Financial — Shareholder Meeting (April 2021)
32 slides from W.t.b. Financial's shareholder meeting presentation, Apr 26, 2021
Slide 1: Annual Shareholders' Meeting
2021 W.T.B. Financial Corporation Annual Shareholders’ Meeting Presented by: Larry Sorensen Chief Financial Officer
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,” “expe
Slide 3: Company Overview
W.T.B. Financial Corporation Company Overview
Slide 4: Mission and Geographic Footprint
MISSION AND GEOGRAPHIC FOOTPRINT Our Mission Markets Served 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 relationships with
Slide 5: Core Identity
CORE IDENTITY • Pacific Northwest regional community bank • Business model: Relationship banking • Over 110 years of heritage • High value customer relationships • 4th generation Chairman and CEO • Organic customer growth • Private ownership and family heritage • Broad product line and customer base
Slide 6: Financial Management Principles
FINANCIAL MANAGEMENT PRINCIPLES Balance sheet strength: Shareholder value / Capital discipline: • Credit discipline…strong allowance position • Maintain capital adequacy • Capital management • Internal capital generation for growth • Ample liquidity resources • Competitive return on capital • Modera
Slide 7: 2020 Big WTBFC Themes and Issues
2020 BIG WTBFC THEMES AND ISSUES Pandemic a Major Global Shock: Company Response: Societal disruption Positioned for the unexpected Remote work Balance sheet strength Volatile Economic Landscape: Capacity to withstand risk is not free GDP plummets Credit Support to Borrowers Unemploy
Slide 8: Operating Environment
Operating Environment
Slide 9: COVID-19 Economic Impact Unprecedented
COVID-19 ECONOMIC IMPACT UNPRECEDENTED Gross Domestic Product (2008 to 2021) GDP Plummeted 31.4% in Q2 2020 Then recovered 33.4% in Q3 2020 Great recession looks mild by comparison, but recovery much slower Unemployment Rate (2008 to 2021 Great Pandemic Recession Unemployment rate spiked fro
Slide 10: Rates Plummet...10-Year UST Record Low
RATES PLUMMET…10-YEAR UST RECORD LOW Effective Fed Funds Rate (2008 to 2021) Fed Policy takes short term rates to zero for Fed policy drives second time in 13 years rates down 500 bps …only leaves room Low rate policy meant Fed only had 250 for 250 bps decline bps of “policy room” to stimulate r
Slide 11: Lower Highs and Lower Lows
LOWER HIGHS AND LOWER LOWS 10.00% 10-Year UST Treasury Rates 9.09% (1990 to 2020) 7.89% 7.50% 6.58% Implications: Loan pricing pressure 5.23% Accelerating refinance activity 5.00% Lower reinvestment yields 5.23% 3.20% Funding costs hit “zero bound” 4.16% 3.04% Margin compression 2.50% 3.20
Slide 12: Industry Themes
Industry Themes
Slide 13: 2020 Major Industry Themes
2020 MAJOR INDUSTRY THEMES • Growth records: • Assets increased $3.2 trillion, or 17%...next highest: 11% in 2004 • Securities increased $1.1 trillion, or 28%...next highest: 23% in 2009 • Cash position increased $1.5 trillion, or 91%...2nd highest in history • Deposits increased $3.3 trillion, or 2
Slide 14: Earnings Comparison...Industry and WTBFC
EARNINGS COMPARISON…INDUSTRY AND WTBFC Industry (Millions) W.T.B. Financial Corporation (000's) WTBFC net interest revenue up YoY Year Net Change Year Net Change Elevated provision expense big Income Statement: 2019 2020 $'s % 2019 2020 $'s % Net Interest Revenue $ 546,669 $ 526,645 $ (20,024) -
Slide 15: Fin Tech Sector Map
FIN TECH SECTOR MAP Innovation and disruption continues Increasing vendor dependencies a challenge Rationalizing and integrating technology a major priority Executing and delivering to and for clients is crucial Technology spend will continue to be significant
Slide 16: WTBFC 2020 Performance in Perspective
WTBFC 2020 Performance in Perspective
Slide 17: Assets and Shareholders' Equity
ASSETS AND SHAREHOLDERS’ EQUITY Total Assets (in thousands) $9,814,000 • Assets + $2.6 billion, or 37% in 2020 • PPP Loan program and organic deposit growth drove assets $6,552,000 $7,165,000 higher $5,669,000 $6,246,000 • Shareholders’ equity + $111 million, or 16% in 2020 • Earnings and improved b
Slide 18: Investible Cash and Securities Trends
INVESTIBLE CASH AND SECURITIES TRENDS Investible Cash (upper) and Securities (lower) (in millions) $4,041 $1,463 $2,420 $2,136 $2,340 $ $1.6 % $524 67% $1,711 $749 $751 Billion $326 $2,578 $1,589 $1,896 $ Growth over the % Growth over the $1,385 $1,387 Past Year Past Year 2016 2017 2018 2019 2020 Se
Slide 19: Deposit Portfolio Trends
DEPOSIT PORTFOLIO TRENDS Total Deposits (in millions) $8,699 $6,227 $5,449 $5,639 $ $2.5 % 39.7% $4,924 Billion $ Growth over the % Growth over the Past Year Past Year 2016 2017 2018 2019 2020 Deposit Mix (in millions) • Deposit growth extraordinary throughout 2020 • 1st half up $1.3 billion…mostly
Slide 20: Loan Portfolio Trends
LOAN PORTFOLIO TRENDS Total Loans (in millions) $5,592 $4,543 $3,932 $4,047 $3,785 $ $1.0 % 23.1% Billion $ Growth over the % Growth over the Past Year Past Year 2016 2017 2018 2019 2020 Portfolio Loan Mix (in millions) Commercial and industrial $2,066 • Loan growth was largely due to the PPP loan p
Slide 21: Capital Perspective and Framework
CAPITAL PERSPECTIVE AND FRAMEWORK • Capital levels and ratios are strong • Equity equals $807 million, or 8.22% of assets (down 149 bps YoY due to asset growth) • Regulatory capital well above regulatory minimums • Unallocated capital = $202 million and 306 bps • Capital quality is high • No intangi
Slide 22: Focus on Capital
FOCUS ON CAPITAL Shareholders' Equity (in thousands) $806,518 $695,904 $602,665 $496,286 $530,791 $ $110.6 % 15.9% million $ Growth over the % Growth over the Past Year Past Year 2016 2017 2018 2019 2020 WTBFC REGULATORY CAPITAL POSITION (000'S) WTBFC REGULATORY CAPITAL RATIOS $ 261,839 “Tightest” u
Slide 23: Credit Performance
CREDIT PERFORMANCE • Credit performance has been strong • Noncurrent loans remain at low levels (< 0.25% of assets) • Charge-offs less than recoveries over past four years • Non-pandemic impacted borrowers generally in strong and liquid financial condition • Internal risk ratings show isolated rise
Slide 24: Credit Relief During Pandemic
CREDIT RELIEF DURING PANDEMIC PPP Loans: Outstanding Principal Amount Originations Q1 2020 Q4 2020 Q1 2021 Count Balance Count Balance Count Balance Count Balance Round 1 5,512 $ 1,310,108,000 - $ - 4,529 $ 983,107,000 2,314 $ 748,138,000 Round 2 2,489 $ 413,071,000 - $ - - 2,475 $ 411,684,000 Total
Slide 25: Credit Performance Metrics
CREDIT PERFORMANCE METRICS Nonaccrual Loans and ORE and % of Assets • Nonaccrual loans remain low by historical standards $15,146 • Nonaccrual loans < 0.25% of assets $13,506 • PPP loans and authorized payment deferrals provided $11,535 $11,412 $10,671 relief to borrowers • Allowance for loan losses
Slide 26: Wealth Management and Trust Division
WEALTH MANAGEMENT AND TRUST DIVISION Key business line…compliments banking client book • Competitive advantage for high value and affluent customers • Long-term, relationship based business line Attractive financial dynamics • Stable, fee income based business • Recurring revenue stream • Diversifie
Slide 27: Income Statement Overview
INCOME STATEMENT OVERVIEW $272,257 2019 $255,058 2020 208,740 • Total revenues grow $36 193,416 million, or 12% • Credit uncertainty drove provision expense higher $83,284 by $30 million $76,312 67,372 48,297 • Net income declined $7.0 33,000 million, or 8.4% YoY 3,200 Net interest revenue Provision
Slide 28: WTBFC Financial Performance Metrics
WTBFC FINANCIAL PERFORMANCE METRICS For the Year • Growth in assets, equity and earning Performance Metric 2019 2020 Difference assets drove much of the decline in Return on average assets 1.26% 0.89% -0.37% Return on shareholders’ equity 12.70% 9.90% -2.80% performance metrics Margin on average ear
Slide 29: WTBFC Shareholder Value Metrics
WTBFC SHAREHOLDER VALUE METRICS Years Ended December 31, Income (000's) and Per Share Data 2019 2020 $ Difference % Change Net Income $ 83,284 $ 76,312 $ (6,972) -8.4% Diluted Earnings per Common Share $ 32.56 $ 30.06 $ (2.50) -7.7% Dividends per Common Share $ 7.00 $ 7.40 $ 0.40 5.7% Book Value per
Slide 30: WTBFC Q1 2021 Highlights
WTBFC Q1 2021 HIGHLIGHTS • Assets up $294 million, or 3.0% QoQ to $10.1 billion • 2nd round of PPP loans drove growth in loans ($241 million) and deposits ($305 million) • Shareholders’ equity declined $30 million, or 3.7% to $777 million • Book value per share down $12.46, or 3.9 percent to $303.84
Slide 31: Closing Thoughts
CLOSING THOUGHTS • 2020 was a remarkably strong year given highly dynamic external environment • Q1 was a strong start to 2021 • Lots of issues to navigate: • Complete participation in 2nd round of PPP loans on clients’ behalf • Heavily manipulated and dynamic rate environment • Maintain earning pow
Slide 32: Thank you for your support!
Thank you for your support!