People's United Financial, Inc. - FORM 8-K - EX-99.1

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8-K - FORM 8-K - People's United Financial, Inc.	d537543d8k.htm

Investor Presentation

May 2013

Investor Contact:

Peter Goulding, CFA

203-338-6799

peter.goulding@peoples.com

Exhibit 99.1

************************

********************************

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

risks

and

uncertainties

that

could

cause

People's

United

Financial's

actual

results

financial

condition

differ

materially

from

those

expressed

implied

such

statements.

Factors

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

Table of Contents

First Quarter 2013 Overview

Strategic Position

Retail Banking

Balance Sheet Management

Appendix

First Quarter 2013 Overview

***************************************************************************************************

First Quarter 2013 Results

Overview / 1Q 2013 vs. 4Q 2012

Operating earnings of $57.9 million or $0.18 per share

Operating net interest margin of 3.38%, down 25 bps

Loan growth of $424 million, 8% annualized growth rate

Deposit growth of $41 million, 1% annualized growth rate

Non-interest income decreased $1.4 million to $82.9 million

Operating non-interest expense decreased $0.5 million to $204.0 million

Efficiency ratio was 64.1% compared to 63.1% last quarter

Net charge-offs were 24 bps compared to 19 bps last quarter

Continued optimization of capital

Repurchased 11.1 million shares, or $144 million, at a weighted average

price of $12.96 per share

22.3 million shares of common stock remain available for repurchase

TCE/TA ratio decreased to 9.6% from 10.2% as we continued to efficiently

deploy capital

Strategic Position

****************************************************************************************************

Average Annual Net Charge Offs / Average Loans (%)

Peer Group Comparison, 2008-2012

Conservative underwriting is a hallmark of this institution

Source: SNL Financial

Efficiency Ratio

Peer Group Comparison, Last Twelve Months Ending 1Q 2013

Low cost producers tend to yield the best returns to shareholders.

Efficiency

progress

requires

both

revenue

growth

AND

expense

discipline

Source: SNL Financial

Large and Attractive Markets

NYC-Northern NJ-LI

Population: 19.0MM

Median HH Income: $60,512

Businesses: 781,444

Population Density (#/sq miles): 2,847

Unemployment Rate (%): 8.1

$100K+ Households (%): 30.8

Boston, MA

Population: 4.6MM

Median HH Income: $67,700

Businesses: 203,770

Population Density (#/sq miles): 1,319

Unemployment Rate (%): 5.9

$100K+ Households (%): 33.8

Hartford, CT

Population: 1.2MM

Median HH Income: $63,997

Businesses: 52,315

Population Density (#/sq miles): 803

Unemployment Rate (%): 8.2

$100K+ Households (%): 30.4

Bridgeport-Stamford, CT

Population: 922,000

Median HH Income: $80,342

Businesses: 49,392

Population Density (#/sq miles): 1,476

Unemployment Rate (%): 7.7

$100K+ Households (%): 41.5

New Haven, CT

Population: 863,000

Median HH Income: $58,598

Businesses: 36,800

Population Density (#/sq miles): 1,427

Unemployment Rate (%): 8.5

$100K+ Households (%): 28.1

Burlington, VT

Population: 215,000

Median HH Income: $55,875

Businesses: 10,846

Population Density (#/sq miles): 171

Unemployment Rate (%): 3.6

$100K+ Households (%): 21.9

Notes: The current national unemployment rate is 7.5%

The current national population density is 89 (#/sq miles)

The population densities of NYC, Boston, Bridgeport and New Haven MSAs are over

ten times the national average

Strong Market Demographic Profile

Source: SNL Financial, US Census data for 2012

Weighted Average Median Household Income

Revenue Opportunities

Continue to deepen our presence in heritage markets such as Connecticut and

Vermont

Substantial growth prospects in larger markets such as New York metro and the

Boston market

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: $1.2BN in commitments and $659MM 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 19.0MM, 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

Revenue Opportunities

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

“rent”

intellectual

capital

–

customer

funds

leave

the

bank

Hired executive from PNC as Senior Vice President and Chief Investment Officer

Increasing momentum in other fee income businesses with a focus on cross-sell

Commercial

insurance:

revamped

systems

and

combined

all

agencies

into

single

entity;

focused

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

Growing Future Earnings Per Share

Loans and Deposits per Share

Over the past two years, loans per share and deposits per share have grown at

compound annual rates of 16% and 13%

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

Expense Progress

Estimated Cost Savings Analysis

Our Q1 2013 operating expense base of $204MM reflects $29MM (~$114MM 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

the

acquired

institutions

4Q09,

and

then

applies

the

peer

median

expense

growth

rate

each

subsequent

quarter.

233

204

$50

$100

$150

$200

$250

Without Expense

Initiatives

Announced Acquisition

Savings

Other Initiatives

Pro Forma / Actual

Operating Noninterest Expense ($MM)

Expense Progress

Estimated Cost Savings Analysis

The $29MM 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

the

acquired

institutions in 4Q09, and then applies the peer median expense growth rate in each subsequent quarter

Retail Banking

***************************************************************************************************

Retail & Business Banking Franchise

Distribution

400+ branches over 6 states

•

~33% of branches are in-store

600+ ATMs

Online & mobile banking

Call center operations located in Bridgeport,

CT and Burlington, VT

Scale

5 in deposit market share in New England

Customer base

Approximately 800,000 commercial, business

banking and consumer relationships

Strategic Focus of Deposit Franchise

Growth

Core customers and deposits

Multiple product households

Leverage employee expertise to drive sales

Brand execution

Employee expertise

Superior customer experience

In-store supermarket strategy

Leveraging the Citizen’s branch acquisition

Navigating a low rate environment

Balancing growth, retention and cost of funds

Constant evaluation of branch-level profitability

•

Consolidated 18 branches in 2011 and 2012, or ~5% of our franchise, which is in-line with peers

•

Selective de novo branches in key markets: Prudential Center in Boston, MA; Lexington, MA; Wellesley, MA;

and Park Ave in Manhattan

Deepening Market Presence

Connecticut

Massachusetts

Vermont

New York

New Hampshire

Maine

Leading

market

position

the

best

commercial

banking

market

the

#1 in Fairfield County, CT, 65 branches, $6.1BN, 18.2% market share

Source: SNL Financial

Branches

$BN

B of A

155

24.5

24.0

Webster

124

12.1

11.8

People's United

165

10.9

10.7

Wells Fargo

7.3

7.2

TD Bank

5.9

5.8

First Niagara

4.6

4.5

JPM Chase

4.5

4.4

Citi

3.0

2.9

Liberty

2.9

2.8

RBS

2.6

2.5

Branches

$BN

B of A

262

54.6

25.0

RBS

254

30.9

14.1

Santander

229

18.9

8.6

TD Bank

157

10.8

5.0

Eastern Bank

6.8

3.1

Independent Bank

4.5

2.0

Middlesex

3.5

1.6

People's United

3.2

1.5

Boston Private

2.9

1.3

Century

2.4

1.1

Branches

$BN

People's United

2.6

22.4

TD Bank

2.6

22.0

Merchants

1.2

10.6

RBS

0.9

7.3

KeyCorp

0.8

6.7

Northfield

0.5

4.3

Community

0.4

3.7

Union

0.4

3.4

Passumpsic

0.3

2.9

Berkshire Hills

0.3

2.8

Branches

$BN

JPM Chase

804

393.1

38.3

Citi

268

69.6

6.8

B of A

365

60.6

5.9

HSBC

164

57.3

5.6

Capital One

277

39.0

3.8

M&T

299

33.3

3.3

TD Bank

222

22.4

2.2

KeyCorp

269

18.3

1.8

Wells Fargo

18.0

1.8

First Niagara

212

16.1

1.6

People's United

2.5

0.2

Branches

$BN

RBS

6.8

24.3

TD Bank

5.4

19.3

B of A

4.9

17.5

People's United

1.4

4.9

Merrimack

1.0

3.6

BNH

0.9

3.2

Santander

0.8

2.9

NH Thrift

0.8

2.8

Northway

0.7

2.4

Centrix

0.7

2.3

Branches

$BN

TD Bank

3.7

16.4

KeyCorp

2.7

11.7

Bangor Bancorp

2.0

8.9

Camden National

1.8

8.1

B of A

1.4

6.0

First Bancorp

1.0

4.6

Machias

0.8

3.6

People's United

0.8

3.5

Bar Harbor

0.8

3.4

Norway

0.7

3.2

Total Deposits ($MM)

6,053

2,926

2,479

2,063

1,970

1,241

Market Total Deposits ($MM)

33,334

117,089

556,863

25,508

17,111

4,499

Branch Count

18.2

2.5

0.5

8.1

11.5

27.6

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,

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 six of the acquired Citizens branches located outside the NYC MSA

Large New Markets

Connecticut

In-store

Versus

Traditional

Branch

Business

(Last

Twelve

Months

Through

3/31/13)

In-store Versus Traditional Branches

Connecticut

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

Partnership allows us to leverage our brand with the ~1.8 million shoppers who visit Connecticut

Stop & Shop stores every week

In-store locations operate under the same business model as traditional branches

and sell all the Bank’s products and services

Mortgages, Home Equity Loans, Business Loans and Investments

Connecticut in-store branches accounted for a significant portion of the new

branch

business

booked

the

market

Business Banking Overview

Business Banking target customer has credit needs up to $1.5 million and/or annual

sales up to $5 million

Over 60 Business Banking professionals currently serving customers across the 6-

state footprint

Comprehensive credit, deposit, insurance, investment and specialized services

available (includes payroll, merchant, cash management, retirement)

Credit products include business lines of credit and term loans plus commercial

real estate-secured mortgage loans, typically secured and personally guaranteed

Leverage the combination of local, executive-level line leadership (i.e., Market

Presidents), strong lending & relationship management capability, and market-

leading retail banking focus to solidify our reputation with small business

customers

Balance Sheet Management

****************************************************************************************************

Securities Portfolio Summary

The duration of the securities portfolio as of 3/31/13 is approximately 3.7 years,

up slightly from prior quarters in conjunction with the addition

of municipal

bonds to the portfolio

In 3Q 2011, we took action to reduce the premium on our books and protect

against prepayment exposure

82% of the securities portfolio is in MBS and CMOs with a book price of $100.71

An additional 12% of the securities portfolio is invested in municipal bonds with a

book price of $111.90. While the book price is well above par, these bonds do not

have

pre-payment

risk

and

represent

attractive

value

with

book

yield

3.78%

on a tax-equivalent basis

Strong Sources of Liquidity

PBCT maintains high levels of liquidity and is over 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 provides a significant long-term opportunity to grow

deposits and customer relationships in southern New York, specifically on Long

Island and in Westchester County

Additional liquidity of $2.5BN exists in the form of unpledged U.S. Agency MBS &

CMO’s

Federal Home Loan Bank (FHLB) relationship enables up to $2.4BN of additional

borrowings

For 4Q 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 ~$49MM 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:

Analysis is as of 12/31/12 filings

Data as of 12/31/12 SEC filings; where exact +100bps shock up scenario data was not provided, PBCT interpolated based on data disclosed

Data as of 12/31/12 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

-2.9%

5.5%

2.0%

2.6x

Shock Up

200bps ³

-4.8%

11.0%

4.5%

2.6x

Share Repurchase Activity

The prolonged period of near zero short-term interest rates and above average

capital levels presents us with the opportunity to repurchase shares at a discount to

earnings power in a normalized rate environment

repurchases

also

help

normalize

both

dividend

payout

ratio

and

ROATE

Repurchased 11.1 million shares, or $144 million, at a weighted average price of

$12.96 per share in 1Q 2013

Increased share repurchase activity from 4.7 million shares in 4Q 2012

Expect

complete

latest

repurchase

authorization

(10%

outstanding)

within

2013

Over the last five years PBCT has repurchased over $800 million of shares

Share repurchases at the current stock price have a tangible book value dilution

earnback period of ~5 years and no execution risk

Year to date through May 6, 2013, 14.3 million shares, or $186 million, have been

repurchased

Appendix

****************************************************************************************************

Allowance for Loan Losses

Originated Portfolio Coverage Detail

(in $ millions)

1.13%

1.11%

0.00%

0.50%

1.00%

1.50%

2.00%

NPLs:Loans

ALLL:Loans

Commercial

Banking

1.57%

0.32%

0.00%

0.50%

1.00%

1.50%

2.00%

NPLs:Loans

ALLL:Loans

Retail Banking

Commercial ALLL -

$159.5 million

98% of Commercial NPLs

Retail ALLL -

$18.0 million

20% of Retail NPLs

Total

ALLL

$177.5

million

71% of Total NPLs

1.25%

0.88%

0.00%

0.50%

1.00%

1.50%

2.00%

NPLs:Loans

ALLL:Loans

Total

Capital Ratios

Since 1Q 2010

2010

1Q 2011

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013

People’s United Financial

Tang.

Com.

Equity/Tang.

Assets

18.7%

13.9%

11.7%

11.4%

11.2%

10.2%

9.6%

Leverage Ratio

1, 5

19.2%

14.5%

12.1%

11.8%

11.5%

10.6%

10.0%

Tier 1 Common ²

23.1%

17.1%

13.9%

13.6%

12.7%

12.0%

Tier

Risk-Based

Capital

23.9%

17.9%

14.4%

14.1%

13.2%

12.5%

Total

Risk-Based

Capital

25.6%

19.4%

16.0%

15.6%

14.7%

13.7%

People’s United Bank

Leverage

Ratio

12.3%

11.4%

11.0%

10.9%

10.8%

9.8%

9.7%

Tier

Risk-Based

Capital

15.4%

13.9%

13.1%

13.0%

13.2%

12.2%

12.1%

Total

Risk-Based

Capital

4,5

16.3%

14.8%

14.0%

14.1%

13.1%

13.5%

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

People’s United Bank, New York Times,

Starwood, PepsiCo

Bob Trautmann

SEVP & General Counsel

20+

People’s United Bank, Tyler Cooper & Alcorn

Management Committee

Peer Group

Firm

Ticker

City

State

Associated

ASBC

Green Bay

BancorpSouth

BXS

Tupelo

City National

CYN

Los Angeles

Comerica

CMA

Dallas

Commerce

CBSH

Kansas City

Cullen/Frost

CFR

San Antonio

East West

EWBC

Pasadena

First Niagara

FNFG

Buffalo

FirstMerit

FMER

Akron

Fulton

FULT

Lancaster

Huntington

HBAN

Columbus

M&T

MTB

Buffalo

New York Community

NYCB

Westbury

Signature

SBNY

New York

Susquehanna

SUSQ

Lititz

Synovus

SNV

Columbus

Valley National

VLY

Wayne

Webster

WBS

Waterbury

Wintrust

WTFC

Lake Forest

Zions

ZION

Salt Lake City

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

approximate

measure

the

cost

required

People’s

United

Financial

generate

dollar

revenue,

the

ratio

(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)

(ii)

net

interest

income

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

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

The

tangible

equity

ratio

the

ratio

(i)

tangible

stockholders’

equity

(total

stockholders’

equity

less

goodwill

and

other

acquisition-related

intangible

assets)

(the

numerator)

(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

* * * * * * *

People's United Financial, Inc. - FORM 8-K - EX-99.1 - May 13, 2013

Attached files

People's United Financial, Inc. Reports