Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 CASH DIVIDEND PRESS RELEASE Q2 2017 - Blue Hills Bancorp, Inc. | dividendsq22017.htm |
| 8-K - 8-K ANNUAL MEETING 2017 - Blue Hills Bancorp, Inc. | annualmeeting2017.htm |
Title
1 Footnote.
Annual Meeting of Stockholders
May 17, 2017
Transformation. Diversification. Growth.
Forward-Looking Statements
This presentation, as well as other written communications made from time to time by the Company and its subsidiaries and
oral communications made from time to time by authorized officers of the Company, may contain statements relating to the
future results of the Company (including certain projections and business trends) that are considered “forward-looking
statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking
statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,”
“intend” and “potential.” For these statements, the Company claims the protection of the safe harbor for forward-looking
statement contained in the PSLRA.
The Company cautions you that a number of important factors could cause actual results to differ materially from those
currently anticipated in any forward-looking statement. Such factors include, but are not limited to: our ability to implement
successfully our business strategy, which includes significant asset and liability growth; changes that could adversely affect the
business in which the Company and the Bank are engaged; prevailing economic and geopolitical conditions; changes in interest
rates, loan demand, real estate values and competition; changes in accounting principles, policies and guidelines; changes in
any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive,
governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services. For
additional information on some of the risks and important factors that could affect the Company’s future results and financial
condition, see “Risk Factors” in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange
Commission. The forward-looking statements are made as of the date of this presentation, and, except as may be required by
applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the
reasons why actual results could differ from those projected in the forward-looking statements.
2
3
Key Transformation Initiatives
4
Risk management
Critical priority with dynamic
model change
Disciplined credit and
operational risk focus
Controlled interest rate risk
Business capabilities
Residential lending/mortgage
banking
Diversified commercial lender
Cash management and deposit
products
Delivery channels
Broader product offerings
Repositioned and expanding
branch network
Emerging alternative delivery
channels
Increase brand awareness
Building Franchise Value
Experienced leadership team
Upgraded leverageable infrastructure
Diversified business model
Strong direct lending capabilities
Strong asset quality
Attractive deposit mix with ongoing growth
Improving spread / fee revenue diversity
5
Attractive Footprint
6
Blue Hills Bank branch
Loan production office
Nantucket Bank branch
Loan Driven Growth
7
Total assets ($ million) Net loans ($ million)
2,500
2,000
1,500
1,000
500
0
12
/31
/20
10
12
/31
/20
11
12
/31
/20
12
12
/31
/20
13
12
/31
/20
14
12
/31
/20
15
12
/31
/20
16
3/3
1/2
01
7
$911 $971
$1,229
$1,314
$1,728
$2,114
$2,470 $2,497
2,500
2,000
1,500
1,000
500
0
12
/31
/20
10
12
/31
/20
11
12
/31
/20
12
12
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/20
13
12
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/20
14
12
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15
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16
3/3
1/2
01
7
$202 $277
$488
$765
$1,133
$1,523
$1,913 $1,968
Well Diversified Portfolio
8
Loan composition at 3/31/2017 Loan composition at 12/31/10
$2.0 billion $204 million
Other Loans 6%
Residential
94%
Consumer
1%
Construction
4%
C&I
11%
CRE
35%
Home Equity
4%
Residential
45%
Valuable Origination Platform
9
Residential mortgages
($ million)
Commercial & construction loans
($ million)
Originations Purchases
600
500
400
300
200
100
0
2010 2011 2012 2013 2014 2015 2016 Q1 '17
$69
$134
$166 $176
$237
$272
$539
$91
Originations Purchases
600
500
400
300
200
100
0
2010 2011 2012 2013 2014 2015 2016 Q1 '17
$0 $2
$178
$305
$243
$325
$359
$55
56
13
88
46
89
77
104
72
66
236
171
36
13
526
108
70
186
119
72
171
295
30 85
274
4
87
23
32
Improved Deposit Mix
10
Deposits ($ million) Deposit composition
At 12/31/10
At 3/31/2017
Cost of deposits:
1.60% in 2010 0.73% in Q1' 17
2,500
2,000
1,500
1,000
500
0
12
/31
/20
10
12
/31
/20
11
12
/31
/20
12
12
/31
/20
13
12
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14
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15
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16
3/3
1/2
01
7
$754 $756 $818
$915
$1,213
$1,434
$1,809
NOW &
Demand
10%
Savings
23%
Money
market
2%
CDs
65%
NOW &
Demand
19%
Savings
14%
Money
market
36%
CDs
31%
$1,857
Net Interest Income Growth
11
Net interest income ($ millions)
and net interest margin
(1) Adjusted net interest margin excludes the impact of volatile items: mutual fund dividends, purchase accounting accretion and accelerated
bond amortization/accretion.
70
60
50
40
30
20
10
0
2013 2014 2015 2016
$25.1
$42.4
$49.6
$57.0
Net Interest Margin
Reported Adjusted (1)
Q1 '17 2.71% 2.72%
2016 2.68% 2.66%
2015 2.83% 2.64%
2014 2.81% 2.57%
2013 2.24% 2.23%
Net Interest Income ($ millions)
20
15
10
5
0
Q1 '16 Q1 '17
$13.2
$15.9
Improving Core Fee Income
Note: Core fee income includes deposit account fees, interchange & ATM fees, mortgage
banking revenue, and loan level derivative income (CRE loan swaps)
12
Core fee income ($ millions)
10
9
8
7
6
5
4
3
2
1
0
2012 2013 2014 2015 2016 Q1 '16 Q1 '17
$2.7
$4.1 $4.2
$5.2
$7.7
$1.5 $1.6
Leverageable Infrastructure
13
Core noninterest expense* ($ millions)
and employees at period end (#)
*Core noninterest expense excludes one-time costs related to the charitable foundation, mutual-to-stock conversion,
Nantucket acquisition and restructuring of incentive and benefit plans.
Core noninterest expense Full-time equivalent employees
70
60
50
40
30
20
10
0
2010 2011 2012 2013 2014 2015 2016 Q1 '17
$17.4
$21.0
$26.3
$29.2
$40.6
$44.1
$51.7 $53.6
103
122
141 147
202 209
228 227
annualized
Noninterest Expense Growth
(dollars in thousands)
14
Q1 '17 LTM 2016 2015
Reported Noninterest Expense $ 53,078 $ 51,746 $ 44,082
Less: Equity Plans (5,082) (4,868) (1,124) effective Q4'15
Less: Seaport Branch (871) (476) (17) opened in Q4‘16
Less: Westwood Branch (959) (982) (484) opened in Q4'15
Adjusted Noninterest Expense $ 46,166 $ 45,420 $ 42,457
Note: Growth in adjusted noninterest expense includes costs related to the expansion of the
mortgage business, the onboarding of new asset-based lending and municipal banking businesses,
and relocating to a new headquarters.
Improvement in Earnings
(dollars in thousands)
15
Q1 '17 2016 2015 2014(1)
Pre-Tax Income $ 9,240 $ 12,458 $ 10,064 $ 8,014
Less: NRS Gain (5,947) — — —
Less: Pension Curtailment Gain — — — (1,304)
Less: Securities (Gains) & Losses 1,022 (1,280) (1,968) (2,515)
Less: BOLI Death Benefits — (506) — (182)
Less: Mutual Fund Dividends — (961) (3,647) (3,603)
Adjusted Pre-tax income $ 4,315 $ 9,711 $ 4,449 $ 410
(1) Pre-tax income for 2014 excludes Nantucket acquisition expenses, mutual-to-stock conversion expenses, and the Charitable
Foundation contribution.
Note: Equity plan expense of $1,408, $4,868 and $1,124 included in Q1 '17, 2016 and 2015, respectively; no comparable expense in
2014.
Positive Operating Leverage
(dollars in thousands)
16
Q1 '17 Q1 '16 % Change
Net Interest Income $ 15,881 $ 13,201
Noninterest Income 6,816 1,377
Less: NRS gain (5,947) —
Less: Securities Losses 1,022 244
Adjusted Revenue 17,772 14,822 20%
Noninterest Expense 13,400 12,068 11%
Adjusted pre-tax, pre-loan loss
provision earnings $ 4,372 $ 2,754 59%
Adjusted Efficiency Ratio
(without NRS gains and securities losses) 75% 81%
Reserve Coverage
17
Loan loss reserve, % of total loans
Note: Trend reflects the migration from using national FDIC historical loss rates to the Company's own loss experience.
2.0%
1.5%
1.0%
0.5%
0.0%
12
/31
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10
12
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11
12
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12
12
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13
12
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14
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15
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16
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01
7
1.21% 1.25%
1.13%
1.25%
1.13% 1.11%
0.97% 0.95%
Nonperforming Assets
18
NPAs, % of assets
1.00%
0.75%
0.50%
0.25%
0.00%
12
/31
/20
10
12
/31
/20
11
12
/31
/20
12
12
/31
/20
13
12
/31
/20
14
12
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15
12
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16
3/3
1/2
01
7
0.18%
0.28%
0.18%
0.13%
0.26%
0.51%
0.36%
0.53%
Note: Approximately one-third of NPAs at 3/31/2017 relates to loans secured by one income property.
Stock Price and Dividends
(1) From 5/15/2016 to 5/15/2017. (2) From 12/31/2016 to 5/10/2017. (3) Excludes dividends announced at this meeting.
ABQI is the NASDAQ OMX ABA Community Bank Index (ABQI), which tracks the performance of the most actively traded
community banks of the composite index (ABAQ).
19
Challenges and Opportunities Ahead
20
Improve returns and
financial ratios
Generate operating leverage
Closely manage rate risk position
Grow core deposit
funding
Grow small business, commercial and municipal deposits
Explore opening de novo branches in select markets (none planned for 2017)
Disciplined acquisitions
Diversify asset
generation
capabilities
Maintain credit focus
Diversify portfolio risk parameters
Expand mortgage banking capabilities
Deploy excess
capital
TCE ratio was 23.7% at 9/30/14; 15.6% at 3/31/17
Organic growth
Buybacks and Dividends (Buybacks through 3/31/17 = $37.4 million)
M&A opportunities
Enhance franchise
value
Continue brand awareness progress
Manage talent development and retention
Appendix
21
22
$000 Mar. 31, 2017 Dec. 31, 2016 Dec. 31, 2015
Cash and equivalents $35,149 $30,496 $33,298
Securities available for sale, at fair value 173,834 204,836 231,690
Securities held to maturity, at amortized cost 201,684 201,027 200,141
FHLB Stock, at cost 14,828 13,352 13,567
Loans held for sale 1,675 2,761 12,877
Total loans 1,987,349 1,931,621 1,540,377
Allowance for loan losses (18,875) (18,750) (17,102)
Loans, net 1,968,474 1,912,871 1,523,275
Premises and equipment, net 21,858 22,034 20,015
Accrued interest receivable 5,994 6,057 5,344
Goodwill and core deposit intangible 10,313 10,560 11,785
Net deferred tax asset 8,751 10,146 10,665
Bank-owned life insurance 32,271 32,015 31,626
Other assets 21,779 23,537 20,060
Total assets $2,496,610 $2,469,692 $2,114,343
Deposits $1,856,722 $1,808,687 $1,433,849
Short-term borrowings 118,000 146,000 205,000
Long-term debt 105,000 105,000 55,000
Other liabilities 19,944 23,098 21,665
Stockholders' equity 396,944 386,907 398,829
Total liabilities and stockholders' equity $2,496,610 $2,469,692 $2,114,343
Balance Sheet
23
Quarters ended
$000 except per share data Mar. 31,2017
Dec. 31,
2016
Mar. 31,
2016
Net interest and dividend income $15,881 $15,950 $13,201
Provision for loan losses 57 927 (27)
Net interest and dividend income, after provision 15,824 15,023 13,228
Noninterest income 6,816 3,807 1,377
Noninterest expense 13,400 13,509 12,068
Income before income taxes 9,240 5,321 2,537
Provision for income taxes 1,753 1,323 870
Net income $7,487 $3,998 $1,667
Earnings per common share:
Basic $0.31 $0.17 $0.07
Diluted $0.31 $0.17 $0.07
Income Statement
Note: Excluding the NRS gain, loss on sale of mutual funds, and the reversal of a state tax valuation allowance, Q1 '17 net income was
$2,652, or $0.11 per diluted share.
24
Loans and Deposits
$000 Mar. 31, 2017 Dec. 31, 2016 Dec. 31, 2015
Loans
1-4 family residential $896,951 $854,478 $602,138
Home equity 80,427 79,132 77,633
Commercial real estate 701,463 686,522 559,609
Construction 70,855 75,950 79,386
Total real estate loans 1,749,696 1,696,082 1,318,766
Commercial business 210,328 205,832 182,536
Consumer 27,325 29,707 39,075
Total loans $1,987,349 $1,931,621 $1,540,377
Deposits
NOW and demand $342,118 $331,508 $288,143
Regular savings 265,116 262,984 287,344
Money market 622,852 573,204 368,050
Certificates of deposit 348,042 340,114 311,978
Brokered money market 50,129 53,357 41,807
Brokered certificates of deposit 228,465 247,520 136,527
Total deposits $1,856,722 $1,808,687 $1,433,849
Loans / total deposits 107% 107% 107%
Loans / customer deposits 126% 128% 123%
25
Financial Highlights
Quarters ended
$000 except per share data Mar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Performance ratios (1)
ROA 0.43 % 0.67 % 0.31%
ROE 2.74 % 4.1 % 1.69%
Efficiency ratio 75 % 68 % 83%
Asset Quality
Nonperforming assets $13,109 $8,983 $10,941
Nonperforming assets / total assets 0.53 % 0.36 % 0.51%
Allowance for loan losses / total loans 0.95 % 0.97 % 1.07%
Allowance for loan losses / nonperforming loans 144 % 209 % 155%
Net charge-offs (recoveries) $(68) $(93) $90
Net charge-offs (recoveries) / average loans, annualized (0.01)% (0.02)% 0.02%
Capital metrics
Common shares outstanding 26,858.328 26,759,953 27,786,642
Book value per share $14.78 $14.46 $14.16
Tangible book value per share $14.40 $14.06 $13.75
Tangible common equity / tangible assets 15.55 % 15.3 % 17.77%
(1): Q1 '17 excludes NRS gain, loss on sale of mutual funds and the reversal of a state tax valuation allowance.