NEWALLIANCE BANCSHARES INC - FORM 8-K - EX-99.1 - TEXT OF POWER POINT - February 3, 2010

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8-K - NEWALLIANCE BANCSHARES, INC. 8-K 2 3 10 - NEWALLIANCE BANCSHARES INCnal8k-2310.htm
Morgan Stanley
U.S. Financials Conference
 
February 3, 2010
 
 
Disclaimer & Forward-Looking Statements
 
Statements in this document and presented orally at the conference, if any, concerning future results, performance, expectations or intentions are forward-looking statements. Actual results, performance or developments may differ materially from forward-looking statements as a result of known or unknown risks, uncertainties and other factors, including those identified from time to time in the Company’s filings with the Securities and Exchange Commission, press releases and other communications. Actual results also may differ based on the Company’s ability to successfully maintain and integrate customers from acquisitions.
 
The Company intends any forward-looking statements to be covered by the Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Except as required by applicable law or regulation, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date as of which such statements are made.
 
The Company’s capital strategy includes deployment of excess capital through acquisitions. The Company’s results reported above reflect the impact of acquisitions completed within the periods reported. Past and future acquisitions are expected to continue to impact the Company’s results in future periods.
 
 
2
Discussion Topics
 
•  
Company Profile and Business Priorities
 
•  
2009 Highlights
 
•  
Financial Performance
 
•  
2010 Outlook
 
 
 
3
Company Profile 12/31/09
 
Preeminent New England bank franchise with strong capital levels and poised for growth
 
 
  •  Market Capitalization 
  • Assets  
  • Loans   
  • Deposits    
  • Branches  
  • ATMs  
  • Employees (FTE)      
$1.27 B
$8.43 B
$4.76 B
$5.02 B
87
104
1,069
 
  
 
 
4
 
The NewAlliance Franchise
 
[MAP]
 
 
 
5
Executive Management Team
 
Name
Title
Years in
Industry
Prior Experience
Peyton R. Patterson
Chairman, President &
Chief Executive Officer
NewAlliance Bancshares
27
Dime Bancorp (NY)
Chemical Bank/Chase Manhattan (NY)
CoreStates Financial Corp. (PA)
       
Glenn I. MacInnes
Executive Vice President &
Chief Financial Officer
26
 Citigroup, Inc (NY)
First Union/First Fidelity Bank (NJ)
United Jersey Bank/Mid-State (NJ)
       
C. Gene Kirby President,
NewAlliance Bank
  24  SunTrust Bank (GA)
       
Gail E.D. Brathwaite Executive Vice President &
Chief Operating Officer
  30  Dime Bancorp (NY)
       
Donald T. Chaffee Executive Vice President &
Chief Credit Officer
 37 Dime Bancorp (NY)
Chase Manhattan Bank (NY)
       
Mark Gibson
Executive Vice President &
Chief Marketing Officer
25
BBVA/Compass Bank (AL)
Coopers & Lybrand (NY)
       
Koon-Ping Chan
 
Executive Vice President &
Chief Risk Officer
31
Dime Bancorp (NY)
Chase Manhattan Bank (NY)
 
6
Fourth Quarter Highlights (2008 vs. 2009)
 
 
ü  Net income of $12.1 million, up 25.7%
 
ü  Record revenue growth
 
s  
Increased 11.1%
s  
NIM expanded 23 bps to 2.82% -- highest in 3 years
s  
Core fee income up 5%
 
 
ü  Strong balance sheet growth
 
s  
Record deposits of $5.02 billion, up 13%
s  
Core deposits increased 32.5%
s  
Loan originations up 56%
s  
Record organic mortgage originations -- over $1.0 billion
7
2009 Highlights
 
ü
Record Deposit Market Share Growth               Up 12.5%
 
ü
Increased EPS by 2 ¢ to 47 ¢                                Up 9%, excluding special FDIC insurance charge
          (up 4%)
 
ü
Overall Revenue Improvement                            Up 7%
 
ü
Flat expenses                                                         Exclusive of FDIC and retirement expense
 
ü
Continued strong credit discipline                     Provision and NCO's decline in 4th quarter to  year low
 
ü
Robust capital levels                                            Poised to grow
 
--  11.08% TCE
 
--  19.92% Tier 1 risk based capital ratio
 
 
8
 
NAL
 
Financial Performance
 
 
 
 
9
Strong Business Momentum
 
Revenue
[CHART] 
Quarterly Trend
  • Net interest income before provision + 3.4% linked quarter
  • Net interest income before provision + 12.0% vs prior year
  • Core non-interest income + 5% vs prior year
  • Core non-interest income - 5% vs. linked quarter due to lower Investment/Trust fees
[CHART] 
 
Full Year
  • 7% improvement in total revenue
  • Net interest income + 7%
  • Non-interest income + 6%
 
 
10
Non-interest Expense
 
 
 
[CHART] 
Quarterly Trend
  • Linked quarter expense increase reflects:
  • One time retirement related expense $1.5MM
  • Pension true-up $0.6MM
  • Launch of ABL $0.4MM
  • Seasonal expenditures $0.3MM
[CHART] 
 
Full Year
  • Excluding $9.8MM in FDIC costs, total non-interest expenses were down $4.1MM, or 2%
 
 
11
2009 Deposit Growth
 
 
[CHART] 
Record Deposit Growth
  • Total deposits over $5 billion.
  • Deposits up 13% vs prior year
  • Core deposits up 32% to $3.5 billion
  • Loan to deposit ratio improved to 95%
 
 
 
12
Interest Expense Drivers
 
Cost of Deposits*
[CHART] 
Cost of Deposits
  • Continue to reduce cost of deposits
  • Down 92 basis points from end of year 2008
  • Down 15 basis points from linked quarter
[CHART] 
 
Cost of Borrowing
  • Down 28 basis points from end of year 2009
  • Down 5 basis points from linked quarter
  • Continue to pay down higher rate FHLBB
 
 
*Rates represent month averages
 
 
13
Continued Expansion of NIM
 
[CHART]
 
Consecutive NIM Expansion
  • 23 basis point expansion vs. prior year quarter
  • 11 basis point expansion over linked quarter
14
Loan Originations / Portfolio
 
Quarterly Trend
[CHART] 
4th Quarter Originations
  • Loan originations totaled $338M for the quarter
  • Up 56% vs. prior year quarter
  • Linked quarter down due to seasonality
[CHART] 
 
Organic originations outpace 2008
  • Loan originations totaled $1.5 B for the year
  • Up 15% vs. prior year
  • 1 billion originated in residential loans
 
 
15
Loan Balances
 
[CHART]
 
  • Lower outstanding vs. prior year primarily attributable to run-off in purchased residential portfolio - $205MM
  • Continued growth in commercial real estate portfolio
16
Aggressively Managed Credit Quality
 
Credit Quality Trends - NAL vs. Peers
 
[CHART] 
Credit Quality
  • Total delinquencies – 1.54%(at 12/31/09)
  • Delinquencies continue to track well below the state and national average
[CHART] 
 
Non-Performing Loans
  • Slight increase of 4 bps linked quarter
  • Provision of $3.5 million for quarter
  • Reserve of $52.5 million (12/31/09)
 
 
 
17
Total Loan Portfolio
 December 31, 2009
 
 
Dec. 31, 2009
  
($ In Millions)
Balance
  
Residential Mortgages
2,397
  
Commercial Real Estate
1,101
  
Consumer Loans
721
           [CHART]
C & I
409
  
Commercial Construction
103
  
Residential Development
29
  
Asset Based Lending
2
  
Total Loans
4,763
  
 
 
18
Residential / Home Equity Portfolio
December 31, 2009
 
Residental Mortgage Portfolio $2.4 billion
●  Percent of total loans:
50%
  
 
●  Total delinquencies
    1.96%
  
 
●  Net credit losses
 0.15%
  
 CHART 
●  Updated FICO
748
  
 
●  Updated LTV
    59%
  
 
 
Home Equity Portfolio
●  Percent of total loans:
15%
  
 
●  Total delinquencies
    0.69%
  
  CHART
●  Net credit losses
 0.06%
  
 
●  Updated FICO
748
  
 
●  Updated LTV
    65%
  
 
●  Line utilization
  49%  
 
19
Total CRE Portfolio 
December 31, 2009
 
 
[CHART]   
[CHART] 
  • Total delinquencies                           0.66%
  • Non-performing loans                       0.56%
  • Net credit losses                                0.25%
 
 
 
 
20
C&I Portfolio
December 31, 2009
 
 
[CHART] 
Percent of total loans                                       9%
  • Total delinquencies                          2.35%
  • Net credit losses                                  .87%
 
CML By NAICS Code
 
           
 
% 
  
% 
  
% 
Manufacturing 
17% 
Condominium Associates 
7% 
Finance & Insurance 
3% 
Construction 
13% 
Professional, Scientific & Technical Srvcs 
7% 
Educational Services 
2% 
Wholesale Trade 
8% 
Health Care & Social Assistance 
6% 
Administrative, Support & Waste Mgmt 
2% 
Retail Trade 
8% 
Transportation & Warehouse 
3% 
Accommodation &  Food Services 
2% 
Real Estate, rental & Leasing 
8% 
Arts, Entertainment & Recreation 
3% 
Other Services 
10%
 
21
Residential Development Portfolio Snapshot
December 31, 2009
 
 
Total portfolio:
 
Percent of total loans:

  • Total delinquencies
  • Net credit losses
  • Total condo portfolio
  • Total NPLs for condo portfolio
 
$29.3 million
 
0.62%
 
8.41%
0.64%
$11.5 million
$1.9 million
 [CHART ]
 
 
22
Quarterly Net Charge-offs by Category
December 31, 2009
 
             
($'s in thousands)
Portfolio size
Q4 2009 Net
Charge-offs
Q4 2009   
%
  
Q3 2009   
%
Q4 2008   
%
             
Residential Mortgages
2,396,303
883
0.15
  
0.16
0.07
 
    
 
      
Consumer Loans
721,281
213
0.12
  
0.25
0.12
             
C&I
409,149
890
0.87
  
2.78
0.51
             
ABL
2,062
                  -
          -
  
          -
          -
             
Commercial Real Estate
1,100,882
691
0.25
  
(0.05)
          -
(Permanent)
            
             
Commercial Construction
103,117
                  -
          -
  
          -
          -
             
Residential Development
29,251
47
0.64
  
11.80
14.95
             
Total
4,762,045
2,724
0.23
  
0.43
0.25
 
 
23
Investment Portfolio
December 31, 2009
 
Total Fixed Income Portfolio:  $2.62 billion
 
Trust Preferred
s  
Book:                    $48.75 mm
s  
Market:                 $33.30 mm
 
 
Private MBS
s  
Book:                    $23.87 mm
s  
Market:                 $20.86 mm
 
 
24
Robust Capital
 
 
Tier 1 Risk Based Ratio
 
[CHART] 
Robust Capital Levels
  • No participation in TARP
  • Excellent ratios
  • $2.6 billion investment portfolio
Tangible Capital Equity Ratio
 
[CHART]
 
 
Poised to Grow
  • Expanded lines of business to include Asset Based Lending
  • Filed a shelf registration 10/27/09
  • Focused M&A strategy
 
 
25
GAP Report
 
   
Dec-09
    
< 3 Months
    
3 - 12 Months
    
< 1 Year Gap
  
   
Balance
    
Rate
  
Balance
  
Rate
  
Balance
  
Rate
  
Balance
  
Rate
  
                                                 
Assets:
                                                
Cash and Due From Banks
     96,927       -       -       -       -       -       -       -  
Short Term Investments
     85,050       0.61       85,050       0.61       -       -       85,050       0.61  
Long Term Investments
     2,654,391       4.06       410,095       2.73       640,184       4.37       1,050,279       3.73  
Total Investments:
     2,739,441       3.96       495,145       2.36       640,184       4.37       1,135,329       3.50  
Loans - Adjustable and Variable
     3,063,601       5.12       826,961       4.23       565,495       5.28       1,392,455       4.65  
Loans - Fixed
     1,659,163       5.75       124,620       5.73       337,544       5.72       462,164       5.72  
Total Loans:
     4,722,764       5.35       951,580       4.43       903,039       5.44       1,854,619       4.92  
Nonaccrual Loans
     51,172       -       -       -       -       -       -       -  
Other Assets
     821,755       -       -       -       -       -       -       -  
Total Assets
     8,432,059       4.28       1,446,725       3.72       1,543,223       5.00       2,989,948       4.38  
Liabilities:
                                                                
Certificates of Deposit
     1,481,445       2.52       535,340       2.78       544,079       1.93       1,079,419       2.35  
Core Accounts
     3,560,166       0.77       121,510       0.96       952,950       0.96       1,074,460       0.96  
Total Deposits:
     5,041,611       1.29       656,849       2.45       1,497,030       1.31       2,153,879       1.66  
Borrowed Money
     1,889,928       4.05       266,415       3.26       478,190       4.18       744,605       3.85  
Other Liabilities
     65,567       -       -       -       -       -       -       -  
Total Liabilities
     6,997,106       2.02       923,264       2.68       1,975,219       2.01       2,898,484       2.22  
                                                                 
Capital:
     1,434,953       -       -       -       -       -       -       -  
Total Liabilities & Equity
     8,432,059       1.68       923,264       2.68       1,975,219       2.01       2,898,484       2.22  
                                                                 
Total Rate Sensitive Assets:
     7,396,836       4.88       1,446,725       3.72       1,543,223       5.00       2,989,948       4.38  
Total Rate Sensitive Liabilities:
     6,379,789       2.22       923,264       2.68       1,975,219       2.01       2,898,484       2.22  
    Cumulative RSA/RSL:       1.57               1.03               1.03          
    Period Gap:       523,460               (431,996 )                        
    Cumulative Gap:       523,460               91,464               91,464          
    Cumulative Gap/Total Assets:       6.21 %             1.08 %             1.08 %        
 
 
 
 
26
NAL
2010 Outlook
 
 
 
27
Accomplishments
 
2009 characterized by healthy organic growth with an eye to future expansion
 
-  
Robust growth in core deposits and market share
 
-  
Significant reduction in deposit costs
 
-  
Material expansion of loan originations
 
-  
Flat expenses while funding investments in management team and Asset Based Lending
 
-  
Superior credit quality
 
-  
Strong revenue and earnings growth
 
 
 
28
2010 Outlook
 
NewAlliance is well poised to grow revenue and earnings
 
-  
Customer and core deposit growth
 
-  
NIM expansion
 
-  
Diversified loan growth
 
-  
Moderate core fee income growth
 
-  
Expense control with targeted investments
 
-  
Cautious optimism regarding credit quality
 
 
 
 
 
29
 
 
NAL

NEWALLIANCE BANCSHARES INC Reports