Newalliance Bancshares — Merger or Acquisition (November 2010)
45 slides from Newalliance Bancshares's merger presentation, Nov 18, 2010
Slide 1: Investor Meetings November - December 2010
Investor Meetings November - December 2010 John R. Koelmel Chief Executive Officer Michael W. Harrington Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 This presentation contains forward-looking information for First Niagara Financial Group, Inc. Such information constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) which involve significant risks and uncertaintie
Slide 3: Why We are Here Today
Why We are Here Today Affirm your support for NewAlliance transaction Convey confidence in our execution preparedness Underscore our consistent financial performance Elaborate on our growth strategy and game plan 3
Slide 4: Today's Discussion
Today’s Discussion Execution and Foundation N Financial Strategic Performance Viewpoint \ N W.
Slide 5: NAL Acquisition - Strategic Rationale
5 NAL Acquisition - Strategic Rationale Advances strategy of building premier Northeast regional banking franchise Unites two strong, growing companies Accelerates growth potential of each company in attractive markets Fortress balance sheet supports continuation of offensive game plan Low risk tran
Slide 6: Building a Strong Franchise in the Northeast
Multi-state territory $30 billion in assets $20 billion in deposits $15 billion in loans TRB Capital: 14.3% 340 branches 730,000 customers 5,000 employees Information is pro forma at transaction close FNFG NAL Pittsburgh Albany Buffalo Syracuse Rochester Philadelphia New Haven Building a Strong Fran
Slide 7: Market Opportunity
Market Opportunity NewAlliance will expand FNFG's existing footprint by more than the size of Pittsburgh, while adding favorable demographics similar to Philadelphia... Demographics The Central Connecticut markets have a population of 2.7 MM, greater than the population of Pittsburgh. Median househo
Slide 8: Outstanding Commercial Market Potential
8 Outstanding Commercial Market Potential Source: SBA firms and employment by MSA 2006 (CHART) (CHART)
Slide 9: Pro Forma Financial Impact - Original Assumptions
9 Pro Forma Financial Impact - Original Assumptions Immediately accretive in 2011 4-5% GAAP accretion in 2012 Better than street consensus Leveraging the strengths of combined entity No capital management assumed in modeling IRR in excess of 15% 7% tangible book dilution and short earnback period St
Slide 10: Pricing Valuation Consistent With Longer Term Norms
10 Pricing Valuation Consistent With Longer Term Norms NAL transaction in line with pricing during a more "normal" environment Historically low pricing of Harleysville and Nat City branch deals due to FNFG's unique position of strength during financial crisis (1) Based on FNFG stock prices as of Nov
Slide 11: Building Franchise with Pricing Discipline
11 Actual National City(1) Harleysville(1) NewAlliance(2) Total Deal Value $52 $300 $1,380 $1,732 Assets $3.9 $5.2 $8.8 $17.9 Loans $0.8 $2.6 $5.0 $8.4 Deposits $3.9 $4.0 $5.1 $13.0 Deposit Premium Core(3) Total 2.5%1.3% 3.6%2.2% 13.0%9.0% 7.0%5.0% Building Franchise with Pricing Discipline $ in mil
Slide 12: First Niagara & NewAlliance Continue to Perform Well in Current Environment
12 First Niagara & NewAlliance.... Continue to Perform Well in Current Environment NCOs / Average Loans Return on Average Assets (1) TCE/TA Operating Net Income (1) (1) Non-GAAP/operating results excludes certain non-recurring items. The Company believes that these measures are useful to management
Slide 13: NewAlliance Update - Financial & Strategic Assessment
NewAlliance Update -Financial & Strategic Assessment Confident with our growth/revenue projections from due diligence Confident in our synergy assessment / expense savings FNFG commercial strategy will translate well into NAL's market Create additional scale and efficiencies using FNFG's retail brok
Slide 14: Guiding Principles of Integration Approach
Guiding Principles of Integration Approach 14 Focus on the best interest of customers Strong partnerships maintained with customers, employees, communities and suppliers FNFG and NAL keep their financial commitment to shareholders Go-forward operating model combines the best of both franchises
Slide 15: How We Will Manage Combined Company
Information is pro forma at transaction close FNFG NAL Pittsburgh Albany Buffalo Syracuse Rochester Philadelphia New Haven 15 How We Will Manage Combined Company Key customer decisions are made where our customers interact with us
Slide 16: How We Will Manage Combined Company: Regional management structure
Our focus will be to bring our Commercial model to the NewAlliance franchise with an emphasis on all commercial segments. Our wealth business model is in support of our Commercial and Retail businesses and is market-based. Retail bank will operate as it does today with support from product specialis
Slide 17: How We Will Manage Credit for the Combined Company
17 Loan approval structure encompasses a balance of regional decision making and centralized governance All policy making and the establishment of lending authorities, risk tolerances and portfolio concentration limits is centralized within Credit Administration function In-market Senior Credit Mana
Slide 18: Hitting the Ground Running With All Stakeholders
Hitting the Ground Running With All Stakeholders 18 Customers Employees Customers Active calling efforts Management highly visible in market Employees Proactive outreach Energized and engaged Communities Regional growth strategy well-received Met with political and civic leaders Regulators Timeline
Slide 19: Today's Discussion
Today’s Discussion NewAlliance Acquisition N Financial Performance i. N Strategic Viewpoint \
Slide 20: Foundation for Future Growth Substantially Complete
Foundation for Future Growth Substantially Complete 20 Added 500 positions in past 18 months Customer Facing - 160 Customer Service & Support - 185 IT/Operations - 110 Audit & Risk Management - 45 Recruited senior talent from larger institutions Building out system capabilities Enhancing internal pr
Slide 21: Infusing Talent Into Senior Leadership
Infusing Talent Into Senior Leadership 21 Senior Leadership Hire Years of Experience Prior Experience Chief Operating Officer 34 JP Morgan ChaseCitibankPNCNational CityM&TBank of NY MellonTD BanknorthKey BankDTCC Corporate Development 17 JP Morgan ChaseCitibankPNCNational CityM&TBank of NY MellonTD
Slide 22: Enhancements Made To Support Large Size Institution
IT Operations Risk Management Capacity on demand mainframe technologyScalability to support $50B+ size bankTeller capture functionalityImproves processing efficiency, branch productivity and reduces costs in branches and back office Full featured web-based cash management systemBetter lockbox proces
Slide 23: Western Pennsylvania: Commercial and Retail Success One Year Later
23 Western Pennsylvania: Commercial and Retail Success One Year Later Origination volume ahead of expectations Low customer attrition Robust and consistent pipeline Solid credit quality New hires are top performers Many opportunities remain (CHART) 3Q09 4Q09 1Q10 2Q10 3Q10 Core deposits at 104% of S
Slide 24: Eastern Pennsylvania: Positive Early Results
Completed very successful system conversion Strong core deposit retention of 96% Over $600 million in loan originations in first six months Building commercial loan pipeline - over $70 million Team strengthened by hiring lenders with bigger bank experience Calling program and new sales goals to incr
Slide 25: Today's Discussion
Today’s Discussion Execution and Foundation NewAlliance Acquisition \ Strategic Viewpoint N W..
Slide 26: Strong Key Financial Metrics
Strong Key Financial Metrics Strong Key Financial Metrics 1 Peer group is SNL Mid Cap Bank Index. Capital ratios are at the consolidated level. Return on average assets (ROAA) and return on average tangible equity (ROATE)excludes the merger and integration costs related to the acquisitions of 57 Nat
Slide 27: Consistently Delivering Earnings Growth
Consistently Delivering Earnings Growth Annual Operating Net Income 1 1.12% 2007 2008 2009 Quarterly Operating Net Income 1 (CHART) (CHART) 3Q09 4Q09 1Q10 2Q10 3Q10 millions 1 Operating net income excludes the merger and integration costs related to the acquisitions of 57 NatCity branches in Septemb
Slide 28: Well Capitalized with Excess Liquidity
28 Well Capitalized with Excess Liquidity $1 Billion in common equity raised since September 2008 Over $500 million in excess capital under Basel III guidelines Active capital management strategy - raised dividend by 7% in 3Q 2010 Further dividend increase / share buybacks under consideration FNFG9/
Slide 29: Deploying excess liquidity drives earnings growth
$3 billion of liquidity created by NCC transaction has not yet been optimized Initially invested in highly liquid securities with stable cash flows Monthly cash flow is greater than current needs of business Capacity in new markets is rapidly expanding Current portfolio will be diversified into less
Slide 30: Recent Highlights - October 2010
Recent Highlights - October 2010 30 Commercial Services New loans and lines of $330 million were led by 12 deals over $5 million Historically high pipeline of over $530 million Deepened regional product offering with purchase of property & casualty insurance broker(Summit) in Eastern PA Retail Servi
Slide 31: Today's Discussion
Today’s Discussion Execution and Foundation \ N NewAlliance Acquisition | Financial Performance \ \
Slide 32: Bar is Raised in Financial Services Industry
32 Bar is Raised in Financial Services Industry And First Niagara excels.... POSITION PERFORMANCE POTENTIAL Strong capital & liquidity positionsProven credit skillsThe right customer market shareService/product excellence Consistent, high quality earningsTop line driven growthDiversity of revenue so
Slide 33: Northeast Region Major Competitors
Northeast Region Major Competitors Performing well against bigger players 33 Institution Western New York Eastern New York Western Pennsylvania Eastern Pennsylvania New England Citizens(RBS) X X X X X Bank of America X X X X M&T X X X HSBC X X KeyCorp X X Sovereign(Santander) X X TD Bank North X X W
Slide 34: Customer Centric, Relationship Driven Focus
Customer Centric, Relationship Driven Focus Source: June 30, 2010 Greenwich Associates Market Tracking Program Loyalty evaluation scores based off of lead relationships First Niagara Peer A Peer B Peer C Peer D Loyalty Index 85 76 76 82 77 Likeliness to Recommend Bank 84 65 82 80 86 Expected Change
Slide 35: M&A Landscape
35 M&A Landscape Industry consolidation forces picking up steam Prolonged economic downturn accelerating pressures Regulatory pressures(compliance, credit, capital, liquidity) Access to capital and growth markets more limited Private capital clamoring for their return on investment Smaller banks at
Slide 36: We Anticipate a Wave of Small-Bank Consolidation in 2011 - 2012
Small banks are at a huge disadvantage: Little access to capital Greater regulatory burden High expense structure Possibly some legacy branch rationalization by bigger players We do not intend to just fill in the map - logical, targeted, urban FNFG NAL Pittsburgh Albany Buffalo Syracuse Philadelphia
Slide 37: FNFG - Poised to Capitalize on Industry Shakeout
FNFG - Poised to Capitalize on Industry Shakeout and Stay On Offense 37 Operating with great momentum Franchise is "fresh" - not burdened by legacy credit and liquidity issues Open and healthy dialogue with regulators Energized management team - great blend of old and new Size and scale enables grea
Slide 38: Why We are Here Today
Why We are Here Today Seek your support for NewAlliance transaction Convey our execution preparedness and confidence Elaborate on our growth strategy and game plan 38 Affirm your support for NewAlliance transaction
Slide 39: Appendix
39 Appendix Investor Meetings November - December 2010
Slide 40: Loan Portfolio Diversification
Loan Portfolio Diversification As of September 30, 2010 40 (CHART) FNFG NAL COMBINED (CHART) (CHART) $10.1B $5.1B $15.2B (CHART)
Slide 41: High Quality Investment Securities Portfolio
41 High Quality Investment Securities Portfolio As of September 30, 2010 (CHART) (CHART) FNFG NAL COMBINED $8.5B $2.8B $11.3B (CHART) (CHART) 98.5% of combined portfolio is investment grade
Slide 42: Focus on Transactional Accounts
42 Focus on Transactional Accounts As off September 30, 2010 (CHART) (CHART) (CHART) (CHART) FNFG NAL COMBINED $13.4B $5.1B $18.5B
Slide 43: Non Interest Income Diversification
43 Non Interest Income Diversification Represents YTD September 30, 2010 (1) Other income includes gain on securities and limited partnerships (CHART) (CHART) (CHART) (CHART) FNFG NAL COMBINED $132.5M $45.9M $178.4M
Slide 44: Notes to Operating Results (FNFG)
The Company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. Operating net income ex
Slide 45: NAL: Notes to Operating Results
NAL: Notes to Operating Results: Net Income, Return on Average Assets and Return on Tangible Equity 45 The Company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors' assessments of business and
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