Attached files
| file | filename |
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| 8-K - FORM 8-K - People's United Financial, Inc. | d8k.htm |
| EX-99.1 - EARNINGS PRESS RELEASE - People's United Financial, Inc. | dex991.htm |
EXHIBIT 99.2
Investor Presentation dated July 21, 2011
 2nd
Quarter 2011 Earnings Conference Call July 21, 2011
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 1
Certain statements contained in this release are forward-looking in nature. These include all
statements about People's United Financial's plans, objectives, expectations and other
statements that are not historical facts, and usually use words such as "expect,"
"anticipate," "believe" and similar expressions. Such statements represent
management's current beliefs, based upon information available at the time the statements are
made, with regard to the matters addressed. All forward-looking statements are subject to
risks and uncertainties that could cause People's United Financial's actual results or financial condition
to differ materially from those expressed in or implied by such statements. Factors of particular
importance to People’s United Financial include, but are not limited to: (1) changes in
general, national or regional economic conditions; (2) changes in interest rates; (3) changes
in loan default and charge-off rates; (4) changes in deposit levels; (5) changes in levels
of income and expense in non-interest income and expense related activities; (6)
residential mortgage and secondary market activity; (7) changes in accounting and regulatory
guidance applicable to banks; (8) price levels and conditions in the public securities markets
generally; (9) competition and its effect on pricing, spending, third-party relationships
and revenues; (10) the successful integration of acquired companies; and (11) possible changes in
regulation resulting from or relating to recently enacted financial reform legislation.
People's United Financial does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or
otherwise. Forward Looking Statement |
 2
Second Quarter 2011 Results
Overview
Operating income of $57.3 million or $0.17 per share
Net interest margin of 4.13%; down 3 bps from 1Q 2011
Total loan growth of $164MM, 3.7% annualized
Total deposit growth of $168MM, 3.7% annualized
Operating efficiency ratio improved to 65.7% from 66.2% in 1Q 2011
NPAs
as a percentage of originated loans, REO and repossessed
assets increased to 2.05% up from 1.96% in 1Q 2011 as a result of a
single credit |
 3
Danvers Bancorp transaction closed June 30
th
, effective July 1
st
. With
the transaction’s close, Kevin Bottomley has joined our Board of
Directors
Successfully completed Smithtown conversion the weekend of June
17
th
, which will result in run-rate cost reductions of $3MM
Announced $20MM in run-rate franchise-wide cost savings initiatives
Announced the expansion of asset-based lending with the closing of
the Danvers transaction. This unit will be led by Michael Maiorino,
who joined us earlier this month
In July, we announced the opening of 3 new Massachusetts branches
(2 in Boston, 1 in Lexington) and a new Connecticut branch
(New Fairfield)
Recent Initiatives |
 4
0.02%
0.04%
0.03%
0.04%
(0.16%)
4.13%
4.16%
1Q 2011 Margin
1Q Accretable
Yield
Reassessment
2Q Accretable
Yield
Reassessment
Loan Yield &
Mix
Investment
Yield & Mix
Deposit/
Borrowing
Rates
2Q 2011 Margin
Total Impact of Decreased Loan Yields: (0.09%)
Net Interest Margin
Linked Quarter Change |
 5
Net Interest Margin* (%)
Last Five Quarters
5
3.69
3.74
3.87
4.00
4.09
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
* Excluding the impact of accretable
yield reassessments |
 6
Loans
Linked Quarter Change
(in $ millions)
6
Annualized
Linked Quarter Change:
18.7%
9.3%
(43.1%)
Originated Annualized
Linked Quarter Change:
12.2%
Total Annualized
Linked Quarter Change:
3.7%
17,687
(288)
239
213
17,523
Mar 31, 2011
Retail
Commercial
Banking
Acquired
Jun 30, 2011 |
 7
Deposits
Linked Quarter Change
(in $ millions)
7
Annualized
Linked Quarter Change:
50.3%
(4.9%)
Total Annualized
Linked Quarter Change:
3.7%
3.7%
(30)
56
142
18,278
18,110
Mar 31, 2011
Legacy
De Novo
Acquired
Jun 30, 2011 |
 8
Non-Interest Income
1.7
(1.3)
(2.0)
1.7
1.9
76.6
74.6
1Q 2011
Bank Service
Charges
Gain on
Smithtown Loan
Sales
Gain on
Residential Loan
Sales
Insurance
Other
2Q 2011 |
 9
Non-Interest Expense
Non-operating
increase from 1Q
202.8
3.3
2.8
(2.9)
(2.2)
1.5
1.7
207.0
1Q 2011
Merger
Related
Executive
Separation
Comp &
benefits
Occupancy &
Equipment
Professional &
Outside Svc
Other
2Q 2011 |
 10
Efficiency Ratio (%)
Last Five Quarters
10
72.2%
71.2%
71.1%
66.2%
65.7%
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011 |
 11
Last Five Quarters
2.05
1.96
3.34
3.61
0.00
1.00
2.00
3.00
4.00
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
PBCT
Peer Group Median
Top 50 Banks by Assets
Asset Quality
NPAs / Loans & REO* (%)
*
Non-performing
assets
(excluding
acquired
non-performing
loans)
as
a
percentage
of
originated
loans
plus
all
REO
and
repossessed
assets;
acquired
non-performing
loans
excluded
as
risk
of
loss
has
been
considered
by
virtue
of
our
estimate
of
acquisition-date fair value and/or the existence of an FDIC loss sharing
agreement Source: SNL Financial and Company filings
|
 12
Last Five Quarters
0.35
0.22
1.02
1.41
0.00
0.50
1.00
1.50
2.00
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
PBCT
Peer Group Mean
Top 50 Banks
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings |
 13
Acquired Smithtown Portfolio
Workout Progress
(in $ millions)
Non-Performing Loans at Closing (11/30/2010)
$268.7
New Non-Performing Loans
130.4
Sales, Settlements & Payoffs
(125.3)
Charge-Offs
(74.9)
Return to Accrual
(20.4)
Paydowns
(9.4)
Non-Performing Loans as of June 30, 2011
$169.1
Remaining
Non-Accretable
Difference
(credit
mark)
$296.6 |
 14
Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Commercial
Banking
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Retail Banking
Commercial ALLL -
$163.9 million
91% of Commercial NPLs
Retail ALLL -
$12.1 million
15% of Retail NPLs
Total ALLL -
$176.0 million
68% of Total NPLs
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Total |
 15
Operating ROAA Progress
Last Five Quarters
0.58
0.50
0.64
0.87
0.92
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011 |
 16
Loans
Deposits
Growing Future Earnings Per Share
Loans and Deposits per Share
* Pro forma for FIF acquisition
* *Pro forma for SMTB & LSBX acquisitions
**
*Pro
forma
for
DNBK
acquisition
$12.0
$14.0
$16.0
$18.0
$20.0
$22.0
2009Q2
2009Q4*
2010Q2**
2010Q4***
2010Q2***
$40.00
$42.50
$45.00
$47.50
$50.00
$52.50
$55.00
$57.50
Deposits ($Bn)
Deposits per share
$12.5
$14.0
$15.5
$17.0
$18.5
$20.0
2009Q2
2009Q4*
2010Q2**
2010Q4***
2011Q2***
$35.00
$40.00
$45.00
$50.00
$55.00
Gross Loans ($Bn)
Loans per share |
 17
Summary
Premium brand built over 169 years
High quality Northeast footprint characterized by wealth, density and
commercial activity
Strengthened leadership team
Low cost of deposits
Strong net interest margin
Superior asset quality
Focus on relationship-based banking
Growing
loans
and
deposits
within
footprint
-
in
two
of
the
largest
MSAs
in
the country (New York City, #1 and Boston, #10)
Significantly more asset sensitive than peers
Pro forma tangible common equity ratio of 13% (with Danvers)
Sustainable Competitive Advantage |
| Q & A
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 Appendix
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 20
Acquired Loan Portfolio
Actual Credit Experience vs. Expectations
Acquired loans initially recorded at fair value (inclusive of related credit mark)
without carryover of historical ALLL
Accounting model is cash-flow based:
Contractual
cash flows (principal & interest) less Expected
cash flows
(principal &
interest)
=
non-accretable
difference
(utilized
to
absorb
actual
portfolio
losses)
Expected
cash
flows
(principal
&
interest)
less
fair
value
=
accretable
yield
Cash flows are both acquisition and pool specific
Expected cash flows are regularly reassessed and compared to actual cash
collections Better
than
expected
credit
experience
results
in
reclass
of
non-accretable
difference
to
accretable yield (prospective yield adjustment over the life of the loans)
As of 6/30/2011
(in $ millions)
Carrying
Amount
Remaining
Accretable
Yield
Remaining
Non-Accretable
Difference
NPLs
a
Remaining
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
FinFed (2/18/10)
$485.4
$53.7
$21.1
$55.5
38.0%
$9.8
Butler (4/16/10)
88.3
28.3
30.6
16.2
188.9%
3.3
RiverBank (11/30/10)
454.2
117.1
15.0
9.6
156.3%
1.8
Smithtown (11/30/10)
b
1,359.3
702.7
296.6
169.1
175.4%
81.1
Total
$2,387.2
$901.8
$363.3
$250.4
(a)
Represent contractual amounts; loans meet People’s United Financial’s
definition of a non-performing loan but are not subject to
classification as non-accrual in the same manner as originated loans. Rather, these loans are considered to be accruing
loans
because
their
interest
income
relates
to
the
accretable
yield
recognized
at
the
pool
level
and
not
to
contractual
interest
payments at the loan level.
(b)
Smithtown charge-offs include $8.2M and $17.7M incurred upon sale of acquired
loans in Q211 and Q111, respectively. |
 21
Capital Ratios
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
2Q 2011
Pro Forma
PEOPLE’S UNITED FINANCIAL
Tang. Com. Equity/Tang. Assets
18.0%
17.8%
14.1%
13.9%
13.9%
13.0%
Leverage Ratio
2, 6
18.2%
18.0%
14.5%
14.6%
14.3%
13.1%
Tier
1
Common
3
22.1%
22.3%
17.0%
17.2%
17.0%
15.5%
Tier 1 Risk-Based Capital
4, 6
22.5%
22.7%
17.5%
17.7%
17.6%
16.2%
Total Risk-Based Capital
5, 6
23.4%
23.6%
19.3%
19.4%
19.1%
17.6%
PEOPLE’S UNITED BANK
Leverage Ratio
2, 6
12.8%
13.0%
11.4%
11.5%
11.6%
10.3%
Tier 1 Risk-Based Capital
4, 6
15.7%
15.4%
13.6%
13.9%
14.2%
12.8%
Total Risk-Based Capital
5, 6
16.6%
16.4%
14.5%
14.8%
15.0%
13.6%
Notes:
1.
Pro forma for Danvers acquisition
2.
Leverage
(core)
Capital
represents
Tier
1
Capital
(total
stockholder’s
equity,
excluding:
(i)
after-tax
net
unrealized
gains
(losses)
on
certain
securities
classified
as
available
for
sale;
(ii)
goodwill
and
other
acquisition-related
intangibles;
and
(iii)
the
amount
recorded
in
accumulated
other
comprehensive
income
(loss)
relating
to
pension
and
other
postretirement benefits), divided by Adjusted Total Assets (period end total assets
less goodwill and other acquisition-related intangibles) 3.
Tier 1 Common represents total stockholder’s equity, excluding goodwill and
other acquisition-related intangibles, divided by Total Risk-Weighted Assets
4.
Tier 1 Risk-Based Capital represents Tier 1 Capital divided by Total
Risk-Weighted Assets 5.
Total
Risk-Based
Capital
represents
Tier
1
Capital
plus
subordinated
notes
and
debentures,
up
to
certain
limits,
and
the
allowance
for
loan
losses,
up
to
1.25%
of
total
risk
weighted assets, divided by Total Risk-Weighted Assets
6.
Well capitalized limits for the Bank are: Leverage Ratio, 5%; Tier 1 Risk-Based
Capital, 6%; and Total Risk Based Capital, 10%. |
 22
We do not expect short-term interest rates to rise in 2011, however, we do expect
Fed tightening to begin in 2012
Given short-term interest rates are very low and are expected to remain low for
the near term, we have continued to hold securities
For
Q1
2011
we
were
4.5x
–
5.0x
as
asset
sensitive
as
the
estimated
median
of
our
peers
depending on scenario
For an immediate parallel increase of 100bps, our net interest income is projected to
increase by ~$40MM on an annualized basis
Yield curve twist scenarios confirm that we are reasonably well protected from bull
flattener (short rates are unchanged, long rates fall) and benefit
considerably from bear flattener environments (short rates rise, long rates
are unchanged) Notes:
1.
Analysis is as of 3/31/11 filings
2.
Data as of 3/31/11 SEC filings, where exact +100bps shock up scenario data was not
provided PBCT interpolated based on data disclosed 3.
Data as of 3/31/11 filings, where exact +200bps shock up scenario data was
not provided PBCT interpolated based on data disclosed Current Asset
Sensitivity Net
Interest
Income
at
Risk
1
Analysis involves PBCT estimates, see notes below
Change in Net Interest Income
Scenario
Lowest
Amongst Peers
Highest
Amongst Peers
Peer Median
PBCT Multiple to
Peer Median
Shock Up
100bps ²
-0.6%
5.6%
0.9%
5.0x
Shock Up
200bps ³
-0.1%
11.2%
2.5%
4.5x |
 For
more information, investors may contact: Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com
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