NewAlliance Bancshares, Inc. (NAL)
Q1 10 Earnings Call
April 28, 2010 9:00 am ET
Peyton Patterson - Chairman, President and CEO
Glenn MacInnes - CFO
Don Chaffee - CCO
Bob Ramsey - FBR Capital Markets
Frank Schiraldi - Sandler O'Neill
Christopher Nolan - Maxim Group
Amanda Larson - Raymond James
Damon DelMonte - KBW
Collyn Gilbert - Stifel Nicolaus
Matthew Kelly - Sterne Agee
Previous Statements by NAL
» NewAlliance Bancshares, Inc. Q1 2009 Earnings Call Transcript
» New Alliance Bancshares Inc. Q4 2008 Earnings Call Transcript
» NewAlliance Bancshares, Inc. Q3 2008 Earnings Call Transcript
Good morning and welcome to the NewAlliance Bancshares first quarter 2010 earnings conference call. All participants will be in a listen-only mode. (Operator Instructions) After today’s presentation there will be an opportunity to ask question. Please note this event is being recorded.
I would now like to turn the conference over to Ms. Peyton Patterson. Ma’am, please go ahead.
Good morning and thank you for joining NewAlliance’s first quarter earnings call. Joining me today are Glenn MacInnes, our Chief Financial Officer; and Don Chaffee, our Chief Credit Officer. We will be happy to take your questions at the end of my remarks.
Before I begin, I would like to remind you to read our Safe Harbor advisement and forward-looking statements on slide two of the presentation, slide that can be found on our website. Our comments today are intended to qualify for the Safe Harbor afforded by that advisement.
First I’ll provide an overview of the quarter and then Glenn will take you through the details. Then I will comeback to speak with you about our outlook on the reminder of 2010. In January, we identified our priorities for 2010 that you see on slide four, which focused on core deposit growth, NIM expansion, moderate non-interest income and loan growth, expense control with targeted investments and cautious optimism regarding credit quality. As our first quarter result suggest, we hit on all cylinders with strong financial performance building of the business momentum of 2009.
Now let me provide some specific highlights. Slide five looks first that the highlights on a linked quarter basis. As you can see, we had net income of $16.4 million, an increase of 35.5%, revenue of $71 million, which improved by 6.4%. NIM expansion of 15 basis points to 2.97% and core deposits increased 3.3% or 13.4% annualized.
On the lending side, we were pleased that loan originations were up 15.1% of which 36% were in commercial loans. A good sign at business optimism is returning and as other have continued to see their loan portfolios decline, our net loan portfolio increased by at $30 million.
As we previously discussed, our expenses return to more normalized levels of $42.2 million, which resulted in an operating efficiency of 59%, adjusting for the one-time BOLI contribution 62%. Credit quality, as Glenn will address shortly remained quite strong and far better than our local and national competitors.
On slide six, you can see the year-over-year progress we’ve made. Specifically, net income is up 41.8% or by $5.2 million. Revenues improved by 14.1% driven largely by the NIM expansion of 39 basis points. As NewAlliance continues to take market share, deposits increased 8.4% and very importantly, core deposits were up 22.7%. Lastly, we have maintained robust capital levels with our TCE ratio at 11.10%.
On slide seven, I’d like to emphasize what we believe is the firm foundation that these results are built on. Inside the company we live by a set of guiding principles that we have developed over the years. These principles foster a culture of performance that provides consistency throughout the business cycles. We start with the customer our brand focuses on delivering exceptional personal service and creating a win-win relationship with our customers. I’ll elaborate on this in my closing remarks.
We empower our employees fundamental to delivering that exceptional service is our workforce that is the one of the most engaged and committed around. One of my most important job is making sure that they have the tools and power to make it happen for our customers. We invest in our business this means investing in people, new business lines, de-novos and opportunistic acquisitions.
We execute on our strategy and as most of you know, we have a five-year strategic plan to deliver superior results for our shareholders. Critical to that is day-to-day execution and our project management offers provides me with frequent visibility to make sure everything that should be happening is happening.
The last guiding principle is really the result of executing on all the others. And that is to deliver superior financial results. We have a performance and results driven culture and we constantly measure how we are doing with service quality, sales, revenues and earnings and these principles together deliver the greatest shareholder value.
Now before turning it over to Glenn, I’d like to comment on the local economic landscape. On slide eight, the good news is we’ve begun to see signs of an economic recovery. In housing sales activity for both new and existing homes has increased, specifically in Connecticut and Massachusetts median prices continue to improve and building permits are up in the first quarter.
With respect to employment, generally the unemployment levels still remain high although lower in Connecticut and Massachusetts, but nationally. Connecticut did add 3000 jobs in March and Massachusetts added 7600. So confidence is returning to businesses.
Lastly, we expect GDP numbers to show modest growth between 3% to 3.25% for the U.S. and in our region, 2.5% to 2.75% growth. Consumer and small-business spending is also picking up. But although we do see bright spots we remain cautiously optimistic as we work our way through the early stages of the recovery. I'm very pleased during the first quarter, we have begun to deliver on the goals we set forth on our last earnings call.