Attached files
| file | filename |
|---|---|
| 8-K - 8-K - People's United Financial, Inc. | d491827d8k.htm |
| EX-99.1 - EX-99.1 - People's United Financial, Inc. | d491827dex991.htm |
 Investor Presentation
February 2013
Investor Contact:
Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com
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," "should" 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 acquisitions; 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
Corporate Overview
Snapshot, as of December 31, 2012
People’s United Financial, Inc.
NASDAQ (PBCT)
Headquarters:
Bridgeport, CT
Chief Executive Officer:
Jack Barnes
Chief Financial Officer:
Kirk Walters
Market Capitalization (2/25/13):
$4.4 billion
Assets:
$30.3 billion
Loans:
$21.7 billion
Deposits:
$21.8 billion
Branches:
419
ATMs:
634
Standalone ATMs:*
83
Founded:
1842
* Includes 25 ATMs in Stop & Shop locations where a branch is not
present. |
 3
Compelling Investment Opportunity
High quality Northeast footprint characterized by wealth and population density
Leading
market
position
in
the
best
commercial
banking
market
in
the
US
Significant
growth
runway
within
existing
markets
–
expanding
in
two
of
the
largest MSAs in the US (New York City, #1, Boston, #10)
Dividend yield of 5+%
Ability
to
maintain
pristine
credit
quality
–
no
credit
“events”
Improving profitability
High levels of liquidity
Capital deployment (organic growth, dividends, share repurchases, M&A)
– TCE/TA 10.2% vs. ~8.0% for peers |
 4
Branch Map |
 5
Deepening Market Presence
Connecticut
Massachusetts
Vermont
New York
New Hampshire
Maine
Leading
market
position
in
the
best
commercial
banking
market
in
the
US
#1 in Fairfield County, CT, 64 branches, $6.1BN, 18.2% market share
#5 deposit market share in New England
Source: SNL Financial
Branches
$BN
%
1
People's United
42
2.6
22.4
2
TD Bank
34
2.6
22.0
3
Merchants
33
1.2
10.6
4
RBS
21
0.9
7.3
5
KeyCorp
13
0.8
6.7
6
Northfield
13
0.5
4.3
7
Community
14
0.4
3.7
8
Union
13
0.4
3.4
9
Passumpsic
7
0.3
2.9
10
Berkshire Hills
7
0.3
2.8
Branches
$BN
%
1
RBS
80
6.8
24.3
2
TD Bank
72
5.4
19.3
3
B of A
29
4.9
17.5
4
People's United
29
1.4
4.9
5
Merrimack
18
1.0
3.6
6
BNH
23
0.9
3.2
7
Santander
20
0.8
2.9
8
NH Thrift
20
0.8
2.8
9
Northway
17
0.7
2.4
10
Centrix
6
0.7
2.3
Branches
$BN
%
1
B of A
262
54.6
25.0
2
RBS
254
30.9
14.1
3
Santander
229
18.9
8.6
4
TD Bank
157
10.8
5.0
5
Eastern Bank
99
6.8
3.1
6
Independent Bank
78
4.5
2.0
7
Middlesex
30
3.5
1.6
8
People's United
56
3.2
1.5
9
Boston Private
11
2.9
1.3
10
Century
28
2.4
1.1
Branches
$BN
%
1
JPM Chase
804
393.1
38.3
2
Citi
268
69.6
6.8
3
B of A
365
60.6
5.9
4
HSBC
164
57.3
5.6
5
Capital One
277
39.0
3.8
6
M&T
299
33.3
3.3
7
TD Bank
222
22.4
2.2
8
KeyCorp
269
18.3
1.8
9
Wells Fargo
87
18.0
1.8
10
First Niagara
212
16.1
1.6
35
People's United
98
2.5
0.2
Branches
$BN
%
1
TD Bank
55
3.7
16.4
2
KeyCorp
60
2.7
11.7
3
Bangor Bancorp
58
2.0
8.9
4
Camden National
50
1.8
8.1
5
B of A
19
1.4
6.0
6
First Bancorp
15
1.0
4.6
7
Machias
14
0.8
3.6
8
People's United
28
0.8
3.5
9
Bar Harbor
16
0.8
3.4
10
Norway
21
0.7
3.2
Branches
$BN
%
1
B of A
155
24.5
24.0
2
Webster
124
12.1
11.8
3
People's United
166
10.9
10.7
4
Wells Fargo
76
7.3
7.2
5
TD Bank
81
5.9
5.8
6
First Niagara
86
4.6
4.5
7
JPM Chase
52
4.5
4.4
8
Citi
20
3.0
2.9
9
Liberty
48
2.9
2.8
10
RBS
50
2.6
2.5 |
 6
Large and Attractive Markets
NYC-Northern NJ-LI
Population: 19.0MM
Median HH Income: $60,595
Businesses: 749,000
Population Density (#/sq miles): 2,058
Unemployment Rate (%): 9.3
$100K+ Households (%): 30.2
Boston, MA
Population: 4.6MM
Median HH Income: $67,887
Businesses: 186,000
Population Density (#/sq miles): 1,013
Unemployment Rate (%): 6.6
$100K+ Households (%): 33.2
Hartford, CT
Population: 1.2MM
Median HH Income: $64,098
Businesses: 50,000
Population Density (#/sq miles): 755
Unemployment Rate (%): 8.1
$100K+ Households (%): 30.0
Bridgeport-Stamford, CT
Population: 919,000
Median HH Income: $80,531
Businesses: 45,000
Population Density (#/sq miles): 1,097
Unemployment Rate (%): 7.7
$100K+ Households (%): 41.5
New Haven, CT
Population: 862,000
Median HH Income: $58,775
Businesses: 34,000
Population Density (#/sq miles): 1,000
Unemployment Rate (%): 8.4
$100K+ Households (%): 27.0
Burlington, VT
Population: 212,000
Median HH Income: $56,090
Businesses: 10,000
Population Density (#/sq miles): 141
Unemployment Rate (%): 4.3
$100K+ Households (%): 21.3
Notes: The current national unemployment rate is 8.3%
The current national population density is 88 (#/sq miles)
The population densities of NYC, Boston, Bridgeport and New Haven MSAs
are over ten times the national average |
 7
Strong Market Demographic Profile
Source: SNL Financial, US Census data for 2011
Weighted Average Median Household Income
$60,603
$53,648
$50,227
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
PBCT
Peer Median
US |
 8
Total Deposits ($MM)
6,053
2,926
2,479
2,063
1,970
1,241
Market Total Deposits ($MM)
33,398
116,705
554,262
25,363
17,119
4,499
Branch Count
64
51
93
45
34
12
18.2
2.5
8.1
11.5
27.6
0.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Bridgeport-
Stamford, CT
Boston, MA
NYC-Northern
NJ-LI
Hartford, CT
New Haven, CT
Burlington, VT
Deposit Market Share by MSA (%) *
We hold significant market share in several key northeast MSAs and are
building our presence in areas with substantial growth potential, such as
the Boston and New York City MSAs
Source: SNL Financial
* Excludes deposits from trust institutions and branches with over $750MM deposits
** Excludes five of the acquired Citizens branches located outside the NYC MSA
**
**
Large New Markets |
 9
Unique opportunity based on People’s United’s excellent in-store
branch banking track record, longstanding relationship with Stop & Shop
and strong traditional branch network in the market
–
In
each
of
the
past
14
years,
People’s
United
has
ranked
as
the
#1
in-store
branch
operator
in
the
US
*
–
Exclusive provider of banking services to Stop & Shop on Long Island, Southern
New York and Connecticut; 140 in-store branches
Strong traditional branch network is crucial for successful in-store branch
banking –
37 traditional branches on Long Island and Westchester County
–
Our traditional branches offer the full suite of services
–
Provides a lift to traffic in both in-store and traditional branches
–
Opportunity to bring average acquired in-store deposit balances up from $4MM to
our average in-store deposit balances of $29MM
Adds additional source of core deposit funding
–
Expected core deposit growth within acquired in-store branches and surrounding
traditional branches will help fund continued New York metro loan
growth Transaction deepens People’s United’s presence on Long Island
and in Westchester County Acquisition of Select Citizens Bank Branches
Transaction Rationale
* Source:
SNL
Financial.
As
measured
by
average
deposits
per
in-store
branch
among
active
banks
with
at
least
$500MM
of
in-store
deposits |
 10
People’s United Bank branches (includes 41 traditional branches in NY)
Recently acquired, in-store branches (53)
Source: SNL Financial
Suffolk
Putnam
Dutchess
Ulster
Orange
Rockland
Westchester
Kings
Queens
Richmond
Nassau
Bronx
New York
Recently acquired, traditional branches (4)
Expanding Long Island, NY and Hudson Valley Footprint
Branch Map |
 11
59%
56%
45%
32%
34%
27%
30%
41%
44%
55%
68%
66%
73%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Consumer
Checking Accounts
Opened
Savings Accounts
Opened
Business Checking
Accounts Opened
Home Equity
Loans
Mortgage Loans
Business Banking
Loans
Investment Sales
In-store Branches
Traditional Branches
On average, in-store locations are open 37% more hours per week than traditional
branches (56 hours vs. 41 hours) but are 30% less expensive to operate
Employees at in-store locations are extensively trained and certified to sell
and support all the Bank’s products and services
Mortgages, Home Equity Loans, Business Loans and Investments
In 2012, Connecticut in-store branches accounted for a significant portion of
the new branch business booked in the market
In-store Versus Traditional Branch Business
In-store Versus Traditional Branches
Connecticut |
 12
Demand
$52
16%
NOW
$71
22%
Savings
$78
25%
Money
Market
$70
21%
CD
$53
16%
Deposits Acquired
Source: Company financials; financial data as of 12/31/2011
Cost of Deposits: 0.59%
Total Deposits: $324MM
Acquisition of Select Citizens Bank Branches
Attractive Deposit Base |
 13
4Q12 Total Loan Portfolio
$21.7 BN
Loans by Business Line
CRE
$6.9
31%
C&I
$5.4
25%
Residential
Mortgage
$3.9
18%
Home Equity &
Other
$2.2
10%
PCLC
$1.6
7%
PUEFC
$0.8
4%
Business Banking
$1.1
5% |
 14
Connecticut
$6.6
31%
Massachusetts
$4.0
18%
New York
$2.9
13%
Vermont
$1.8
8%
New Hampshire
$1.3
6%
New Jersey
$0.6
3%
Other
$3.2
15%
Pennsylvania
$0.2
1%
Maine
$0.9
4%
Maryland
$0.2
1%
Loans by Geography
Notes: Reporting is based on the collateral property address for the
following: SNE Residential Mortgage, Consumer
Home
equity,
Consumer
Other
and
CRE.
Reporting
is
based
on
borrower
address
for
the
following: C&I, Residential construction and NNE loans.
4Q12 Total Loan Portfolio
$21.7 BN
Excluding
equipment
finance loans,
~95% of our
3Q12 loan
portfolio is within
the Northeast |
 15
Revenue Opportunities
Large
new
markets
–
NYC
and
Boston
MSAs
Under-represented asset classes ramping up
Asset-based lending: focused on in-footprint companies with sales of
$15MM-$250MM; credit needs range from $5MM-$35MM; $600BN market, 70%
of which is located in the Northeast Mortgage Warehouse lending: ~$700MM in
commitments, and $447MM in outstandings; estimated market size is over $28BN
in outstandings New York Commercial Real Estate: hiring talent in the New York
metro area, which is a $30BN annual market with a population of 18.9MM, 6.9MM
housing units, and 3.4MM rental units Private Banking: hired senior executive
from mega-cap bank with ~20 years managing private banking in the
Northeast with initial focus on CT, metro New York and metro Boston Enhancing
wealth management offering Proprietary asset allocation and risk management
strategies are implemented with a suite of external managers who represent
our "best in class" recommendations •
Proprietary asset allocation allows us to “rent”
intellectual capital –
no customer funds leave the bank
Hired executive from PNC as Senior Vice President and Chief Investment Officer
Increasing momentum in fee income penetration
Commercial
insurance:
revamped
systems
and
combined
all
agencies
into
a
single
entity;
focused on our deep commercial customer base as well as the education sector
Hired executive from TD to lead cash management business
Growing merchant and payroll services |
 16
Expense Progress
Estimated Cost Savings Analysis
Our Q4 2012 operating expense base of $204.5MM reflects $35MM (~$140MM
annualized) savings from successfully-executed expense initiatives
Source: SNL Financial
Note: “Pro
Forma
/
Actual”
represents
PBCT
operating
noninterest
expense
and
the
actual
expenses
at
the
acquired
institutions.
Acquisition target costs fall away as the acquisitions are completed.
“Without
Expense
Initiatives”
represents
PBCT
operating
noninterest
expense
and
the
actual
expenses
at
the
acquired
institutions in 4Q09, and then applies the peer median expense growth rate in each subsequent
quarter. Operating Noninterest Expense ($MM)
205
240
200
210
220
230
240
250
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
Pro Forma / Actual
Without Expense Initiatives
$35MM
Cost
Savings |
 17
Expense Progress
Estimated Cost Savings Analysis
The $35MM in quarterly cost reductions is attributable to efforts related to
acquisition cost savings and other initiatives
Source: SNL Financial
Note:
“Pro
Forma
/
Actual”
represents
PBCT
operating
noninterest
expense
and
the
actual
expenses
at
the
acquired
institutions.
Acquisition target costs fall away as the acquisitions are completed
“Without
Expense
Initiatives”
represents
PBCT
operating
noninterest
expense
and
the
actual
expenses
at
the
acquired
institutions in 4Q09, and then applies the peer median expense growth rate in each subsequent
quarter Operating Noninterest Expense ($MM)
240
205
7
28
$0
$50
$100
$150
$200
$250
Without Expense
Initiatives
Announced Acquisition
Savings
Other Initiatives
Pro Forma / Actual |
 18
Non-Operating
Operating
Total
Non-Interest Expense
Linked Quarter Change
(in $ millions)
208.9
207.4
(0.3)
205.7
(2.4)
(1.8)
1.9
1.5
(0.4)
204.5
2.9
3.2
3Q 2012
Non-
Operating
REO
Expense
Vesting-
Initial
RRP/SOP
Grant
Occupancy
& Equip
Prof &
Outside Svc
Other
4Q 2012 |
 19
0.9
63.1
(0.4)
(0.4)
0.8
1.4
(0.6)
61.4
3Q 2012
Acquired
Loan
Accretion
Cost
Recovery
Income
Other net
interest
income
Non
interest
income
Operating
expense
REO/
Gains/
other adjs
4Q 2012
Efficiency Ratio (%)
Linked Quarter Change
Notes:
1.
Expense
items
classified
as
“other”
and
deducted
from
non-interest
expense
for
purposes
of
calculating
the
efficiency ratio include, as applicable, certain franchise taxes, REO expenses,
contract termination costs and non-recurring expenses
Revenue
items
classified
as
“other”
and
added
to
(deducted
from)
total
revenues
for
purposes
of
calculating
the
efficiency ratio include, as applicable, asset write-offs and gains associated
with the sale of branch locations 1 |
 20
Efficiency Ratio (%)
Since 1Q 2010
76.1%
73.1%
72.4%
71.9%
66.0%
65.5%
62.4%
62.3%
63.6%
61.5%
61.4%
63.1%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012 |
 21
EMOC has been fully operational since November 2011
Three person committee comprised of the CFO, Chief Administrative Officer and
Chief HR Officer EMOC oversees PBCT’s noninterest expense management,
implements strategies to ensure attainment of expense management targets and
oversees revenue initiatives that require expenditures
Provides a horizontal view of the organization
Expense Management Units (EMUs) established to facilitate EMOC functions
Defined EMUs include:
•
Technology
•
Operations
•
Real Estate Services
Spending requests above $25,000 are submitted by EMU owners for approval
Staffing models, staffing replacements and additions for mid-level positions and
above require approval by the Committee
Introduction to EMOC
Expense Management Oversight Committee (EMOC)
•
Employment/Benefits
•
Marketing
•
Regulatory/Institutional
•
Depreciation/Equipment
•
Decentralized
•
Intangible Amortization |
 22
Operating Net Interest Margin (%) -
Decrease from 3Q 2012
3.82%
3.63%
(0.07%)
(0.02%)
0.03%
(0.02%)
(0.05%)
(0.04%)
(0.02%)
3Q 2012
Margin
New loan
volume
Acquired
loan
accretion
Loan
repricing/
amortization
Investments
Senior Notes
Danvers CD
FV Adj
Deposit
Rates/ Mix
4Q 2012
Margin |
 23
Net Interest Margin (%)
4.03
3.97
3.88
3.82
3.63
4.12
3.97
3.96
3.89
3.63
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
Margin- Operating
Margin- GAAP |
 24
Acquired Loan Portfolio
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 As of 12/31/2012
(in $ millions)
Carrying
Amount
a, b
Carrying
Amount
Component
b
NPLs
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
Accretable
Yield
Non-Accretable
Difference
FinFed (2/18/10)
$150.5
$11.8
$7.7
$28.2
27%
$11.3
Butler (4/16/10)
60.4
22.6
13.7
8.0
171%
7.9
RiverBank (11/30/10)
237.8
98.2
10.5
22.9
46%
4.5
Smithtown (11/30/10)
768.5
428.6
117.3
74.7
157%
126.1
Danvers (7/1/11)
1,020.9
329.0
18.6
47.8
39%
17.5
Total
$2,238.1
$890.2
$167.8
$181.6
(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.
c |
 25
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
4.98% 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
4Q12 Total Accretion (All interest income on acquired loans)
42
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 9.7
3Q12 Acquired Loan Portfolio Carrying Amount
2,634
4Q12 Effective Tax Rate
32%
4Q12 Acquired Loan Portfolio Carrying Amount
2,238
4Q12 Average Acquired Loan Portfolio
2,436
4Q12 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
6.6
Effective Yield on Acquired Loan Portfolio
6.86%
4Q12 Weighted Average Shares Outstanding
331.4
Weighted Average Coupon on Acquired Loan Portfolio
5.27%
4Q12 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.02
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.59%
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
9.7
4Q12 Average Earning Assets
25,206
Add: Average unamortized loan discount
2
72
Adjusted 4Q12 Average Earning Assets
25,278
Impact on Overall Net Interest Margin (bps)
15
Operating Net Interest Margin
3.63%
Adjusted Net Interest Margin
3.48%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
1 |
 26
Summary of Acquired Loan Accounting Events
(in $ millions)
Period
Cost Recovery
Income
Gain (Loss) on Sale
of Acquired Loans
Acquired Loan
Impairment
Net Impact
2011
Q1
0.0
5.5
0.0
5.5
Q2
0.0
7.2
0.0
7.2
Q3
0.0
(4.8)
0.0
(4.8)
Q4
5.0
(0.4)
(7.4)
(2.8)
2012
Q1
0.0
0.0
(0.3)
(0.3)
Q2
4.7
0.7
0.2
5.6
Q3
4.1
0.0
(5.7)
(1.6)
Q4
0.0
0.3
0.0
0.3
Total
$13.8
$8.5
($13.2)
$9.1
Since 2010, we have acquired $5.4BN of loans, over 40% of which
remain in our portfolio. We did not recognize cost recovery income,
gains (losses) on sale or impairment in 2010. Since 1Q 2011, the
net
impact of such activity is +$9.1MM |
 27
Loans
Linked Quarter Change
(in $ millions)
Annualized Linked QTD change
13.3%
1,075
(396)
18
21,040
21,737
Sep 30, 2012
Commercial Banking
Retail
Acquired
Dec 31, 2012 |
 28
Deposits
Linked Quarter Change
(in $ millions)
Total
21,363
21,751
Commercial
Retail
Annualized linked QTD change
6.7%
8.8%
Annualized Linked QTD change- Total
7.3%
15,742
16,006
5,745
5,621
264
124
Sep 30, 2012
Retail
Commercial
Dec 31, 2012 |
 29
Non-Interest Income
Linked Quarter Change
(in $ millions)
81.4
84.3
(1.6)
(2.8)
0.8
0.3
0.7
2.7
2.8
3Q 2012
Insurance
Bank
Service
Charges
Gain on
Loan Sales
Loan
Prepayment
Fees
Gain on
Branch Sale
Trust &
Brokerage
Fees
Other
4Q 2012 |
 30
1.48
2.00
2.34
1.00
2.00
3.00
4.00
1Q 2010
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
PBCT
Peer Group Median
Top 50 Banks by Assets
Since 1Q 2010
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
(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
Peer Group Median represents 15 of 20 peers reporting
Top 50 Banks by Assets represents 32 of 50 banks reporting
Source: SNL Financial and Company filings |
 31
Since 1Q 2010
0.19
0.33
0.51
0.00
0.50
1.00
1.50
2.00
1Q 2010
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
PBCT
Peer Group Median
Top 50 Banks
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings |
 32
Historical Charge-off Experience
2007 –
2012
0.10%
0.10%
0.29%
0.40%
0.28%
0.21%
0.0%
0.5%
1.0%
1.5%
2.0%
2007
2008
2009
2010
2011
2012 |
 33
Return on Assets
Operating ROAA (%)
Return on assets has remained in-line with peers, supported by organic
loan and deposit growth and the integration of recent acquisitions
0.87
0.99
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
PBCT
Peers |
 34
8.6
12.4
11.8
0
3
6
9
12
15
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
PBCT
Peers
PBCT - Normalized Equity
High levels of equity produce below industry ROATE. Normalizing
our
equity base shows that the core bank is performing in-line with peers. As
we continue to efficiently deploy capital actual ROATE will improve
further Return on Tangible Equity
1
Operating ROATE (%)
Notes:
1.
PBCT –
Normalized Equity shows Operating ROATE pro forma for normalized Tangible
Common Equity of 7.75%, in line with peers (see Appendix) and excludes the income related
to cash & securities above the normalized 7.75% TCE/TA level
2.
Peer Group Median represents 18 of 20 peers reporting |
 35
Operating Dividend Payout Ratio
Since 1Q 2010
175%
180%
209%
157%
104%
98%
87%
96%
93%
82%
84%
85%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012 |
 36
Substantial Progress in the Midst of a Financial Crisis
Total Shareholder Return -
Past 5 Years
Source: SNL Financial
April 2007 we raised $3.4BN in our second step conversion
Our conservative credit culture and funding structure coupled with industry
leading capital levels provided significant strength throughout the crisis
(7.0)
(43.6)
21.3
(80.0)
(60.0)
(40.0)
(20.0)
0.0
20.0
40.0
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Feb-13
PBCT
SNL Mid Cap U.S. Bank & Thrift
S&P 500 |
 37
Substantial Progress in the Midst of a Financial Crisis
Key Performance Metrics Since 1Q 2010
Our margin remains well above peers as we thoughtfully deployed capital in
acquisitions and deepened our presence in the Boston and New York metro areas
Under new management we have made considerable progress on our efficiency ratio
Our exceptional credit quality throughout the financial crisis has allowed us to
manage our business with a long-term view
Efficiency Ratio (%)
Operating NIM (%)
Net Charge-offs/Avg. Loans (%)
3.63
3.43
2.50
3.00
3.50
4.00
4.50
PBCT
Peers
63.1
60.3
50
60
70
80
PBCT
Peers
0.19
0.33
0.0
0.5
1.0
1.5
2.0
PBCT
Peers |
 38
Substantial Progress in the Midst of a Financial Crisis
Growing Loans, Deposits and Returning Capital to Shareholders
Growth has far outstripped peers on the key metrics of loans per
share
and deposits per share
This has occurred while we have returned $1.9BN to shareholders
during this period. Returns of capital were in the form of both
dividends ($1.1BN) and share repurchases ($0.8BN) which represents
nearly 45% of our current market capitalization
Line Item
PBCT
Peer
Median
PBCT Vs.
Peers
5-Year Loans Per Share CAGR
17.1%
-1.3%
+18.4%
5-Year Deposits Per Share CAGR
17.7%
2.0%
+15.7%
Notes:
5-Year CAGR figures based on 4Q 2007 to 4Q 2012 data
|
 39
Loans
Deposits
Growing Future Earnings Per Share
Loans and Deposits per Share
$65.59
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
$40
$45
$50
$55
$60
$65
$70
Gross Loans ($BN)
Loans per Share
$65.64
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
$40
$45
$50
$55
$60
$65
$70
Deposits ($BN)
Deposits per Share
Over the past two years, loans per share and deposits per share have grown at
compound annual rates of 16% and 14% |
 40
Strong Sources of Liquidity
PBCT maintains high levels of liquidity and is 90% funded by deposits, retail
repurchase agreements, senior debt and common equity
Strong branch franchise and commercial customer base predominantly funds loan
base without use of brokered borrowings
Citizens transaction added $325MM in deposits and provides a significant
long- term opportunity to grow customer relationships in southern New York,
specifically on Long Island and in Westchester County
Additional
liquidity
of
$2.4BN
exists
in
the
form
of
unpledged
U.S.
Agency
MBS
&
CMO’s
Federal Home Loan Bank (FHLB) relationship enables up to $2.5BN of additional
borrowings |
 41
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
Since 1Q 2010
1Q 2010
1Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
People’s United Financial
Tang. Com. Equity/Tang. Assets
18.7%
13.9%
11.7%
11.4%
11.2%
10.2%
Leverage Ratio
1, 5
19.2%
14.5%
12.1%
11.8%
11.5%
10.6%
Tier 1 Common ²
23.1%
17.1%
13.9%
13.6%
13.6%
12.7%
Tier 1 Risk-Based Capital
3, 5
23.9%
17.9%
14.4%
14.1%
14.1%
13.2%
Total Risk-Based Capital
4, 5
25.6%
19.4%
16.0%
15.6%
15.6%
14.7%
People’s United Bank
Leverage Ratio
1, 5
12.3%
11.4%
11.0%
10.9%
10.8%
9.8%
Tier 1 Risk-Based Capital
3, 5
15.4%
13.9%
13.1%
13.0%
13.2%
12.2%
Total Risk-Based Capital
4,5
16.3%
14.8%
14.0%
14.0%
14.1%
13.1% |
 42
Summary
Sustainable Competitive Advantage
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 Tier 1 Risk-Based and Tier 1
Common ratios |
 Appendix |
 Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
1.20%
1.13%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Commercial
Banking
1.54%
0.36%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Retail Banking
Commercial ALLL -
$157.5 million
95% of Commercial NPLs
Retail ALLL -
$20.0 million
23% of Retail NPLs
Total ALLL -
$177.5 million
70% of Total NPLs
1.30%
0.91%
0.00%
0.50%
1.00%
1.50%
2.00%
NPLs:Loans
ALLL:Loans
Total |
 For
3Q 2012 we were more than twice as asset sensitive as the estimated median of our peer
group
Currently for an immediate parallel increase of 100bps, our net interest income is
projected to increase by ~$48MM 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 9/30/12 filings
2.
Data as of 9/30/12 SEC filings; where exact +100bps shock up scenario data was not
provided, PBCT interpolated based on data disclosed 3.
Data as of 9/30/12 SEC 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
-3.6%
6.7%
2.7%
2.8x
Shock Up
200bps
3
-6.2%
13.4%
4.5%
3.4x |
 46
Name
Position
Years in
Banking
Professional
Experience
Jack Barnes
President & CEO, Director
30+
People’s United Bank (SEVP, CAO),
Chittenden, FDIC
Kirk Walters
SEVP & CFO, Director
25+
People’s United Bank, Santander, Sovereign,
Chittenden, Northeast Financial
Jeff Tengel
SEVP Commercial Banking
30+
People’s United Bank, PNC, National City
Bob D’Amore
SEVP Retail & Business Banking
30+
People’s United Bank
Louise Sandberg
SEVP Wealth Management
30+
People’s United Bank, Chittenden
Lee Powlus
SEVP & Chief Administrative Officer
25+
People’s United Bank, Chittenden, Alltel
Chantal Simon
SEVP & Chief Risk Officer
20+
People’s United Bank, Merrill Lynch US Bank,
Lazard Freres & Co.
Dave Norton
SEVP & Chief HR Officer
2+
People’s United Bank, New York Times,
Starwood, PepsiCo
Bob Trautmann
SEVP & General Counsel
20+
People’s United Bank, Tyler Cooper & Alcorn
Management Committee |
 47
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
NYCB
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 |
 48
In addition to evaluating People’s United Financial’s results of operations in accordance
with U.S. generally accepted accounting principles (“GAAP”), management routinely
supplements this evaluation with an analysis of certain non-GAAP financial measures, such
as the efficiency and tangible equity ratios, tangible book value per share and operating
earnings metrics. Management believes these non-GAAP financial measures provide information
useful to investors in understanding People’s United Financial’s underlying operating performance
and trends, and facilitates comparisons with the performance of other banks and thrifts. Further, the
efficiency ratio and operating earnings metrics are used by management in its assessment of
financial performance, including non-interest expense control, while the tangible equity
ratio and tangible book value per share are used to analyze the relative strength of
People’s United Financial’s capital position. The
efficiency
ratio,
which
represents
an
approximate
measure
of
the
cost
required
by
People’s
United
Financial
to
generate
a
dollar
of
revenue,
is
the
ratio
of
(i)
total
non-interest
expense
(excluding
goodwill
impairment charges, amortization of other acquisition-related intangible assets, losses on real
estate assets and
non-recurring
expenses)
(the
numerator)
to
(ii)
net
interest
income
on
a
fully
taxable
equivalent
("FTE")
basis plus total non-interest income (including the FTE adjustment on bank-owned life
insurance ("BOLI") income, and excluding gains and losses on sales of assets other than
residential mortgage loans, and non- recurring income) (the denominator). People’s
United Financial generally considers an item of income or expense to be non-recurring if it
is not similar to an item of income or expense of a type incurred within the last two years and
is not similar to an item of income or expense of a type reasonably expected to be incurred
within the following two years.
Non-GAAP Financial Measures and Reconciliation to GAAP
|
 49
Operating earnings exclude from net income those items that management considers to be of such a
non- recurring or infrequent nature that, by excluding such items (net of income taxes),
People’s United Financial’s results can be measured and assessed on a more consistent
basis from period to period. Items excluded from operating earnings, which include, but are not
limited to, merger-related expenses, charges related to executive-level management
separation costs, severance-related costs and writedowns of banking house assets, are
generally also excluded when calculating the efficiency ratio. Operating earnings per share is
derived by determining the per share impact of the respective adjustments to arrive at operating
earnings and adding (subtracting) such amounts to (from) GAAP earnings per share. Operating
return on average assets is calculated by dividing operating earnings (annualized) by average
assets. Operating return on average tangible stockholders' equity is calculated by dividing
operating earnings (annualized) by average tangible stockholders' equity. The operating
dividend payout ratio is calculated by dividing dividends paid by operating earnings for the
respective period. Operating net interest margin excludes from the net interest margin those
items that management considers to be of such a discrete nature that, by excluding such items,
People’s United Financial’s net interest margin can be measured and assessed on a
more consistent basis from period to period. Items excluded from operating net interest margin
include cost recovery income on acquired loans and changes in the accretable yield on acquired
loans stemming from periodic cash flow reassessments. Operating net interest margin is calculated
by dividing operating net interest income (annualized) by average earning assets.
Non-GAAP Financial Measures and Reconciliation to GAAP
|
 50
The
tangible
equity
ratio
is
the
ratio
of
(i)
tangible
stockholders’
equity
(total
stockholders’
equity
less
goodwill
and
other
acquisition-related
intangible
assets)
(the
numerator)
to
(ii)
tangible
assets
(total
assets
less
goodwill
and
other
acquisition-related
intangible
assets)
(the
denominator).
Tangible
book
value
per
share
is calculated
by
dividing
tangible
stockholders’
equity
by
common
shares
(total
common
shares
issued,
less
common shares classified as treasury shares and unallocated Employee Stock Ownership Plan
("ESOP") common shares).
In light of diversity in presentation among financial institutions, the methodologies used by
People’s United Financial for determining the non-GAAP financial measures discussed
above may differ from those used by other financial institutions. Please refer to People’s
United Financial’s latest Form 10-Q regulatory filing for detailed reconciliations to
GAAP figures. Non-GAAP Financial Measures and Reconciliation to GAAP
|
 For
more information, investors may contact: Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com |