Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - People's United Financial, Inc. | d382733d8k.htm |
| EX-99.1 - PRESS RELEASE - People's United Financial, Inc. | d382733dex991.htm |
 2
nd
Quarter 2012 Earnings Conference Call
July 19, 2012
EXHIBIT 99.2 |
 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) changes in regulation
resulting from or relating to 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 2012 Results
Overview / 2Q 2012 vs. 1Q 2012
Operating earnings of $67.2 million or $0.20 per share, versus $0.18 per
share in the prior quarter
Net interest margin of 3.97%, down 4 bps
Loan growth of $116 million, 2.3% annualized growth rate
Deposit growth of $190 million, 3.6% annualized growth rate
Non-interest income increased $3.3 million to $75.7 million
Efficiency ratio improved to 61.5% from 63.2%
TCE/TA ratio decreased to 11.5% from 11.7% as we have continued to
efficiently deploy capital |
 3
Continue to expand presence in the New York metro area
Completed the acquisition of 57 Citizens branches
Converted systems and rebranded all acquired Citizens branches over the
weekend of June 22
nd
New York metro footprint now includes approximately 100 branches
Added seasoned in-market lending professionals over the last year and a
half •
Five C&I lenders and two ABL professionals
Hired three senior lenders to lead our New York metro commercial
real estate lending efforts
Increased fee income generation particularly in cash management and
brokerage services
Repurchased 4.5 million shares, or $53.7 million, at a weighted average
price of $11.93 per share
Recent Initiatives |
 4
Net Interest Margin -
Decrease from 1Q 2012
4.01%
3.97%
0.08%
(0.08%)
0.05%
(0.04%)
(0.05%)
1Q 2012
Margin
Lower Loan
Yields
Asset Mix
FV Amort-
Acquired
CDs
Cost
Recovery
Income
Lower
Funding
Rates/ Mix
2Q 2012
Margin |
 5
Net Interest Margin
4.09
4.11
4.07
4.01
3.89
4.13
4.11
4.16
4.01
3.97
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
Margin- Operating
Margin- Reported |
 6
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 (effectively utilized to absorb actual portfolio losses)
Expected cash flows (principal & interest) less fair value = accretable yield
Expected cash flows are regularly reassessed and compared to actual cash collections
The following reclassifications from non-accretable difference to accretable yield during the period
reflect better than anticipated credit performance: Butler: $6.5MM, Smithtown: $2.4MM As
of 6/30/2012 (in $ millions)
Carrying
Amount
a, b
Carrying Amount Component
b
NPLs
c
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
Accretable
Yield
Non-Accretable
Difference
FinFed (2/18/10)
$210.2
$12.8
$7.9
$36.5
22%
$11.4
Butler (4/16/10)
68.2
27.1
16.4
11.4
144%
5.2
RiverBank (11/30/10)
319.7
105.9
11.1
25.3
44%
3.9
Smithtown (11/30/10)
c
954.2
461.5
127.6
111.5
114%
115.8
Danvers (7/1/11)
1, 464.3
542.4
28.0
51.9
54%
8.1
Total
$3,016.6
$1,149.7
$191.0
$236.6
(a)
Initial carrying amounts of acquired portfolios are as follows: FinFed, $1.2BN; Butler, $141MM;
RiverBank, $518MM; Smithtown, $1.6BN; and Danvers, $1.9BN.
(b)
Carrying amount and related components reflect loan sale, settlement and payoff activity which have
occurred since acquisition. (c)
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. |
 7
Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
Note:
1.
Excluding FinFed, the weighted average coupon on the acquired loan portfolio is
5.20%. 2.
Represents
the
difference
between
the
outstanding
balance
of
the
acquired
loan
portfolio
and
the
carrying
amount
of
the
acquired loan portfolio.
$ in millions, except per share data
Impact on Net Interest Margin
Impact on Earnings Per Share
2Q12 Total Accretion (All interest income on acquired loans)
56
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 11.7
1Q12 Acquired Loan Portfolio Carrying Amount
3,377
2Q12 Effective Tax Rate
32%
2Q12 Acquired Loan Portfolio Carrying Amount
3,017
2Q12 Average Acquired Loan Portfolio
3,197
2Q12 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
7.9
Effective Yield on Acquired Loan Portfolio
6.97%
2Q12 Weighted Average Shares Outstanding
340.7
Weighted Average Coupon on Acquired Loan Portfolio
5.51%
2Q12 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.02
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.46%
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
11.7
2Q12 Average Earning Assets
24,040
Add: Average unamortized loan discount
2
106
Adjusted 1Q12 Average Earning Assets
24,146
Impact on Overall Net Interest Margin (bps)
19
Operating Net Interest Margin
3.89%
Adjusted Net Interest Margin
3.70%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
1 |
 8
Loans
Linked Quarter Change
(in $ millions)
Annualized linked QTD change
12.7%
7.7%
-42.7%
Annualized linked QTD change- Originated
11.2%
Annualized Linked QTD change- Total
2.3%
20,606
20,489
103
(360)
374
Mar 31, 2012
Commercial
Banking
Retail
Acquired
Jun 30, 2012 |
 9
Deposits by Business Line
Linked Quarter Change
(in $ millions)
* Retail
includes
Wealth
Management
deposits
of
$72MM
at
3/2012
and
$69MM
at
6/2012
Total
21,268
21,458
Retail *
Annualized linked QTD change
3.7%
3.3%
Annualized Linked QTD change- Total
3.6%
Commercial
15,959
16,105
5,353
5,309
146
44
Mar 31, 2012
Retail
Commercial
Jun 30, 2012 |
 10
Loans
Deposits
Growing Future Earnings Per Share
Loans and Deposits per Share
$60.49
$14
$15
$16
$17
$18
$19
$20
$21
$22
2010Q2
2010Q4
2011Q2
2011 Q4
2012 Q2
$40
$45
$50
$55
$60
$65
Gross Loans ($BN)
Loans per Share
$62.99
$14
$15
$16
$17
$18
$19
$20
$21
$22
2010Q2
2010Q4
2011Q2
2011Q4
2012 Q2
$40
$45
$50
$55
$60
$65
Deposits ($BN)
Deposits per share |
 11
72.4
75.7
(0.2)
(1.2)
(0.8)
1.0
1.6
2.2
0.7
1Q 2012
Insurance
Gain on
Loan Sales-
Residential
Bank
Service
Charges
Loan
Prepayment
Fees
Operating
Lease
Income
Gain on
Loan Sales-
Acquired
Other
2Q 2012
Non-Interest Income
Linked Quarter Change
(in $ millions) |
 12
Non-Operating
Operating
Total
Non-Interest Expense
Linked Quarter Change
(in $ millions)
208.6
205.7
0.6
205.6
0.7
1.5
(5.0)
(0.7)
202.1
3.0
3.6
1Q 2012
Non-Operating
Citizens
Operating
Professional &
Outside Svc
Comp &
Benefits
Other
2Q 2012 |
 13
Efficiency Ratio
Last Five Quarters
64.9%
62.0%
61.8%
63.2%
61.5%
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012 |
 14
Acquired Citizens branches will add approximately $7.8MM of non-interest expenses
on a quarterly basis
In addition to the initiatives below, we are taking a longer-term view of cost
planning, which will help us reduce the pro forma cost base
Recent Initiatives
Focused on Cost Reduction
Initiatives
Status
Benchmarking business unit performance
Benchmarking initiatives complete
Right-sized our employee base following acquisitions
FTE reduced by 276, even after staffing for revenue
initiatives
Consolidating 15 branches
Consolidated 14 branches, completed sale of 1 branch
Actively marketing unused facilities
20 properties identified (14 owned, 6 leased); 50% of cost
savings anticipated from 3 locations
Identify IT related savings
$2 million of annual IT contractor and other consultant
savings will be realized in 2012
Lower than anticipated rent and depreciation expense
Estimated $900,000 positive impact in 2012
Savings in check processing charges and courier fees
Estimated $900,000 positive impact in 2012
Savings in core processing costs
Estimated $2.3 million positive impact in 2012
Purchasing initiatives and legal fee savings
Estimated $500,000 positive impact in 2012
Other initiatives
Identified approximately $9 million of other annual savings
throughout the franchise |
 15
1.67
2.09
3.04
1.00
2.00
3.00
4.00
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
PBCT
Peer Group Median
Top 50 Banks by Assets
Last Five Quarters
Asset Quality
NPAs / Loans & REO* (%)
*
Source: SNL Financial and Company filings
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 (i) our estimate of acquisition-date fair value, (ii) the
existence of an FDIC loss sharing agreement, and/or (iii) allowance for loan losses established
subsequent to acquisition |
 16
Last Five Quarters
0.26
0.46
0.71
0.00
0.50
1.00
1.50
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
PBCT
Peer Group Median
Top 50 Banks
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings |
 17
Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
1.57%
1.28%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Commercial
Banking
1.42%
0.37%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Retail Banking
Commercial ALLL -
$155.5 million
82% of Commercial NPLs
Retail ALLL -
$20.0 million
26% of Retail NPLs
Total ALLL -
$175.5 million
66% of Total NPLs
1.52%
1.00%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Total |
 18
Operating ROAA Progress
Last Five Quarters
0.92%
0.98%
0.86%
0.88%
0.97%
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012 |
 19
Operating ROATE Progress
Last Five Quarters
7.1%
8.0%
7.4%
8.0%
8.9%
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012 |
 20
Operating Dividend Payout Ratio
Last Five Quarters
95%
85%
93%
91%
82%
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012 |
 21
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
People’s United Financial
Tang. Com. Equity/Tang. Assets
13.9%
12.5%
12.0%
11.7%
11.5%
Leverage Ratio
1, 5
14.3%
12.7%
12.5%
12.2%
11.9%
Tier 1 Common
2
17.0%
15.0%
14.3%
13.9%
13.6%
Tier 1 Risk-Based Capital
3, 5
17.6%
15.2%
14.8%
14.5%
14.1%
Total Risk-Based Capital
4, 5
19.1%
16.7%
16.2%
16.0%
15.6%
People’s United Bank
Leverage Ratio
1, 5
11.6%
11.8%
11.1%
11.0%
11.0%
Tier 1 Risk-Based Capital
3, 5
14.2%
14.1%
13.1%
13.1%
13.1%
Total Risk-Based Capital
4,5
15.0%
14.9%
14.0%
14.1%
14.0%
Notes:
1.
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) 2.
Tier 1 Common represents total stockholder’s equity, excluding goodwill and
other acquisition-related intangibles, divided by Total Risk-Weighted Assets
3.
Tier 1 Risk-Based Capital represents Tier 1 Capital divided by Total
Risk-Weighted Assets 4.
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
5.
Well capitalized limits for the Bank are: Leverage Ratio, 5%; Tier 1 Risk-Based
Capital, 6%; and Total Risk-Based Capital, 10% Capital Ratios
|
 22
Summary
Premium brand built over 170 years
High quality Northeast footprint characterized by wealth, density and
commercial activity
Strong leadership team
Solid 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)
Improving profitability
Returning capital to shareholders
Strong capital base as evidenced by robust Tangible Common Equity and
Tier 1 Common ratios
Sustainable Competitive Advantage |
 Appendix |
 24
We do not expect short-term interest rates to rise any time soon
Given short-term interest rates are very low and are expected to remain low for the near term,
we have added additional securities
For 1Q 2012 we were more than twice as asset sensitive as the estimated median of our peer
group, depending on the scenario
For an immediate parallel increase of 100bps, our net interest income is projected to increase
by ~$59MM 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 3/31/12 filings
2.
Data as of 3/31/12 SEC filings, where exact +100bps shock up scenario data was not provided PBCT
interpolated based on data disclosed 3.
Data as of 3/31/12 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
-4.3%
5.8%
2.4%
2.6x
Shock Up
200bps ³
-7.4%
11.7%
4.2%
3.3x |
 25
Peer Group
Firm
Ticker
City
State
1
Associated
ASBC
Green Bay
WI
2
BancorpSouth
BXS
Tupelo
MS
3
City National
CYN
Los Angeles
CA
4
Comerica
CMA
Dallas
TX
5
Commerce
CBSH
Kansas City
MO
6
Cullen/Frost
CFR
San Antonio
TX
7
East West
EWBC
Pasadena
CA
8
First Niagara
FNFG
Buffalo
NY
9
FirstMerit
FMER
Akron
OH
10
Fulton
FULT
Lancaster
PA
11
Huntington
HBAN
Columbus
OH
12
M&T
MTB
Buffalo
NY
13
New York Community
NYB
Westbury
NY
14
Signature
SBNY
New York
NY
15
Susquehanna
SUSQ
Lititz
PA
16
Synovus
SNV
Columbus
GA
17
Valley National
VLY
Wayne
NJ
18
Webster
WBS
Waterbury
CT
19
Wintrust
WTFC
Lake Forest
IL
20
Zions
ZION
Salt Lake City
UT |
 For
more information, investors may contact: Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com |