Attached files
| file | filename |
|---|---|
| 8-K - 8-K - People's United Financial, Inc. | d620299d8k.htm |
 Investor Presentation
October 2013
Investor Contact:
Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com
*************************
Exhibit 99.1 |
 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
Table of Contents
1.
Strategic Position
2.
Income Statement Improvements
3.
Interest Rate Risk Profile
4.
Summary
5.
Appendix |
 Strategic Position
************************************ |
 4
Corporate Overview
Snapshot as of September 30, 2013
People’s United Financial, Inc.
NASDAQ (PBCT)
Headquarters:
Bridgeport, CT
Chief Executive Officer:
Jack Barnes
Chief Financial Officer:
Kirk Walters
Market Capitalization (10/28/13):
$4.6 billion
Assets:
$31.5 billion
Loans:
$23.2 billion
Deposits:
$22.2 billion
Branches:
410
ATMs:
629
Standalone ATMs:*
109
Founded:
1842
* Includes 18 ATMs in Stop & Shop locations where a branch is not
present |
 5
Compelling Investment Opportunity
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 in excess of 4%
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 8.5% vs. ~8.0% for peers |
 6
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
th
in deposit market share in New England *
Customer base
Approximately 800,000 commercial, business
banking and consumer relationships
* Source: SNL Financial |
 7
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 31 branches since the beginning of 2011, or ~8% of our
franchise |
 8
Branches
$BN
%
1
B of A
151
26.0
24.3
2
Webster
124
12.7
11.9
3
People's United
163
11.3
10.6
4
Wells Fargo
76
8.6
8.1
5
TD Bank
78
6.2
5.8
6
JPM Chase
53
4.8
4.5
7
First Niagara
85
4.3
4.0
8
Citi
21
3.0
2.9
9
Liberty
48
2.9
2.7
10
RBS
47
2.6
2.4
Branches
$BN
%
1
TD Bank
54
18.2
48.2
2
KeyCorp
58
2.6
6.8
3
Bangor Bancorp
60
2.2
5.7
4
Camden National
44
1.8
4.9
5
B of A
19
1.4
3.7
6
First Bancorp
16
1.0
2.7
7
Machias
20
0.9
2.4
8
People's United
26
0.9
2.3
9
Bar Harbor
16
0.9
2.3
10
Norway
22
0.8
2.0
Branches
$BN
%
1
RBS
80
6.8
24.0
2
TD Bank
73
5.8
20.4
3
B of A
28
4.6
16.3
4
People's United
28
1.3
4.7
5
NH Mutual
18
1.0
3.7
6
BNH
22
0.9
3.1
7
Santander
20
0.9
3.0
8
NH Thrift
20
0.8
2.7
9
Centrix
6
0.7
2.6
10
Northway
18
0.7
2.4
Branches
$BN
%
1
People's United
42
2.6
22.5
2
TD Bank
35
2.6
22.0
3
Merchants
32
1.3
10.8
4
RBS
21
0.8
7.0
5
KeyCorp
13
0.7
6.1
6
Northfield
13
0.5
4.4
7
Community
14
0.4
3.8
8
Union
12
0.4
3.5
9
Passumpsic
6
0.3
2.8
10
Berkshire Hills
7
0.3
2.7
Branches
$BN
%
1
JPM Chase
802
425.0
37.4
2
Citi
270
76.1
6.7
3
B of A
331
60.9
5.4
4
HSBC
159
59.2
5.2
5
Capital One
274
41.4
3.6
6
M&T
299
35.5
3.1
7
TD Bank
229
24.3
2.1
8
KeyCorp
257
19.7
1.7
9
First Niagara
209
17.4
1.5
10
Signature
28
15.3
1.3
35
People's United
97
2.7
0.2
Branches
$BN
%
1
B of A
253
57.8
20.0
2
RBS
252
29.0
10.0
3
Santander
226
18.1
6.2
4
TD Bank
157
11.7
4.0
5
Eastern Bank
98
7.0
2.4
6
Independent Bank
85
4.9
1.7
7
Middlesex
30
3.5
1.2
8
People's United
54
3.1
1.1
9
Boston Private
11
3.0
1.0
10
First Republic
4
3.0
1.0
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, 65 branches, $6.3BN deposits, 18.3% market share
Source: SNL Financial; FDIC data as of June 30, 2013
Notes: PBCT branch count updated as of September 30, 2013
|
 9
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 (%): 7.9
$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 (%): 6.2
$100K+ Households (%): 33.8
Hartford, CT
Population: 1.2MM
Median HH Income: $63,997
Businesses: 52,315
Population Density (#/sq miles): 803
Unemployment Rate (%): 8.3
$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 (%): 7.6
$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 (%): 8.6
$100K+ Households (%): 28.1
Burlington, VT
Population: 215,000
Median HH Income: $55,875
Businesses: 10,846
Population Density (#/sq miles): 171
Unemployment Rate (%): 3.4
$100K+ Households (%): 21.9
Notes: The current national unemployment rate is 7.2%
The current national population density is 89 (#/sq miles)
Source: SNL Financial, US Census data for 2012
The population densities of NYC, Boston, Bridgeport and New Haven MSAs are each
over ten times the national average |
 10
Strong Market Demographic Profile
Source: SNL Financial, US Census data for 2012
Weighted Average Median Household Income |
 11
Total Deposits ($MM)
6,241
2,772
2,679
2,119
2,032
1,217
Market Total Deposits ($MM)
34,635
125,864
590,131
26,355
17,868
4,538
Branch Count
65
52
94
45
34
12
18.0
2.2
0.5
8.0
11.4
26.8
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; FDIC data as of June 30, 2013
*
Excludes
deposits
from
trust
institutions
and
branches
with
over
$750MM
deposits;
excludes
branches
and
deposits
located outside each MSA
Large New Markets |
 12
Connecticut In-store Versus Traditional Branch Business (Last Twelve Months
Through 9/30/13) 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 in the market
* Sold
by
employees
who
are
also
licensed
representatives
of
our
brokerage
affiliate |
 Income Statement Improvements
********************** |
 14
Consistent Loan Growth
Since the end of 2010, People’s United is one of only six banks within the top 50
by assets
that
have
grown
loans
in
each
quarter
1
Source:
SNL Financial. Excludes trust banks. Statements based on Total Gross Loans and
Finance Leases, as reported, net of unearned discounts and gross of loss
reserves. Does not include accrued interest on loans Notes:
1
Includes People’s United, First Niagara, First Republic, Signature, UMB and
Prosperity 2
Reflects completion of Danvers Bancorp acquisition in 2Q 2011
3
Based on 41 of the top 50 banks reporting
Quarterly Loan Growth Since 1Q 2011
PBCT Median = 1.52%
Top 50 Median = 1.03% |
 15
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
greater Boston
New York:
•
17 commercial relationship managers up from zero in 1Q 2010
•
97 branches up from 5 in 1Q 2010; 58 branches, or 60%, are in-store
locations •
2 de novo branches with over $40MM deposits: Bronxville, NY (opened April 2011);
Park Avenue (opened December 2012)
Massachusetts:
•
32 commercial relationship managers up from 14 since 2010
•
54 branches up from 19 in 1Q 2010
•
3 de novo branches with over $40MM deposits: Prudential Center in Boston (opened
November 2010); Milk Street in Boston (opened December 2010); Lexington, MA
(opened July 2011) Notes:
1
Data as of September 30, 2013
1
1 |
 16
Under-represented asset classes ramping up
Recently hired senior professionals to lead large corporate and government banking
businesses New
York
Commercial
Real
Estate
gaining
traction
as
evidenced
by
strong
growth
Increased Private Banking activity with initial focus on CT, metro New York and
greater Boston Significant progress within asset-based and mortgage
warehouse lending teams Enhancing wealth management offering
Proprietary asset allocation and risk management strategies are implemented both
internally and with a suite of external managers who represent our "best
in class" recommendations •
UMA technology allows us to “rent”
intellectual capital –
no customer funds leave the bank
Increasing momentum in other fee income businesses with a focus on
cross-sell Commercial
insurance:
revamped
systems
and
combined
all
agencies
into
a
single
entity
Delivering interest rate swaps and foreign exchange products to existing corporate
customers Expanding international trade finance with the recent hire of a
senior executive Growing cash management, merchant and payroll services
Revenue Opportunities
Multiple Levers for Growth |
 17
Growing Future Earnings Per Share
Loans and Deposits per Share
We have made substantial progress over the past two years, growing loans and
deposits at compound annual growth rates of 16% and 12%, respectively
|
 18
Efficiency Ratio
Peer Group Comparison, Last Twelve Months Ending 3Q 2013
Low cost producers tend to yield the best returns to shareholders.
Efficiency progress requires both revenue growth AND expense discipline
Median, excluding PBCT = 62.2%
Source:
SNL Financial
Notes:
Represents 19 of 20 peers reporting in 3Q 2013 |
 19
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 |
 20
Expense Progress
Estimated Cost Savings Analysis
Source:
SNL Financial
Notes:
“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 (19 of 20 peers reporting in 3Q
2013) Our 3Q 2013 operating expense base of $209MM reflects $24MM (~$96MM
annualized) savings from successfully-executed expense initiatives
|
 21
233
209
7
17
$0
$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 $24MM in quarterly cost reductions is attributable to efforts related to
acquisition cost savings and other initiatives
Source:
SNL Financial
Notes:
“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 (19 of 20 peers reporting in 3Q
2013) |
 22
Average Annual Net Charge Offs / Average Loans (%)
Peer Group Comparison, 2008-2012
Conservative underwriting is a hallmark of this institution
Median, excluding PBCT = 0.98%
Source: SNL Financial |
 23
P/TBV vs. ROATE
Peer Group Regression Analysis
Improved profitability, enhanced predictability of earnings and transparent capital
allocation will create additional shareholder value
Source: SNL Financial
Note: Analysis utilizes SNL 3 Year Betas, as of October 28, 2013
|
 Interest Rate Risk Profile
************************** |
 25
Net Interest Income (NII) Sensitivity
Interest Rate Risk Profile
Notes:
1.
Yield
curve
twist
pivot
point
is
18
month
point
on
yield
curve.
Short
End
defined
as
overnight
to
18
months.
Long
End
defined
as terms greater than 18 months |
 26
For 2Q 2013 we were more than twice as asset sensitive as the estimated median of our
peer group
Notes:
1.
Analysis is as of 06/30/13 filings
2.
Data as of 06/30/13 SEC filings; where exact +100bps shock up scenario data was
not provided, PBCT interpolated based on data disclosed 3.
Data as of 06/30/13 SEC filings; where exact +200bps shock up scenario data was
not provided, PBCT interpolated based on data disclosed Interest Rate Sensitivity
vs. Peers 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
-3.4%
8.4%
1.9%
2.3x
Shock Up
200bps ³
-6.0%
16.8%
3.8%
2.9x |
 Summary
***************************************** |
 28
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 |
 Appendix
**************************************** |
 30
Net Interest Margin
Linked Quarter Change
(%) |
 31
Loans
Linked Quarter Change
(in $ millions)
Annualized Linked QTD change
6.3%
22,866
406
175
(220)
23,227
Jun 30, 2013
Commercial
Retail
Acquired
Sep 30, 2013 |
 32
CRE
$8.0
34%
C&I
$5.3
23%
Residential
Mortgage
$4.2
18%
Home Equity &
Other
$2.1
9%
PCLC
$1.6
7%
Business Banking
$1.1
5%
PUEFC
$0.9
4%
3Q13 Total Loan Portfolio
$23.2 BN
Loans by Business Line |
 33
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.
Excluding
equipment
finance loans,
~95% of our
3Q13 loan
portfolio is within
the Northeast
3Q13 Total Loan Portfolio
$23.2 BN |
 34
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 9/30/13
(in $ millions)
Carrying
Amount
a, b
Carrying Amount Component
b
NPLs
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
d
Accretable
Yield
Non-Accretable
Difference
Danvers (7/1/11)
$826.4
$263.4
$14.0
$32.9
43%
$22.9
Smithtown (11/30/10)
520.7
314.5
101.3
90.3
112%
126.9
Others (various dates)
315.0
88.2
23.3
30.9
75%
29.9
Total
$1,662.1
$666.1
$138.6
$154.1
(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.
(d)
Includes approximately $6.9MM of charge-offs applied against reserves
established subsequent to acquisition. c |
 35
Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
Notes:
1.
Excluding FinFed, the weighted average coupon on the acquired loan portfolio is
4.55% 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 |
 36
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
2013
Q1
0.0
0.0
(2.6)
(2.6)
Q2
0.0
5.8
0.9
6.7
Q3
3.0
0.0
(2.6)
0.4
Total
$16.8
$14.3
($17.5)
$13.6
Since 2010, we have acquired $5.4BN of loans, over 30% 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
+$13.6MM |
 37
Deposits
Linked Quarter Change
(in $ millions)
Total
21,982
22,190
Retail
Annualized Linked QTD change
3.8%
Commercial
16,196
15,897
5,786
6,293
507
(299)
Jun 30, 2013
Retail
Commercial
Sep 30, 2013 |
 38
Non-Interest Income
Linked Quarter Change
(in $ millions)
86.1
84.0
2.0
1.2
0.8
(0.3)
(5.8)
2Q 2013
Insurance
Bank Service
Charges
Customer
Derivative
Income
Gain on Acq
Loan Sales
Gain on Resi
Mtg Loan Sales
3Q 2013 |
   39
Total
Non-Operating
Operating
Non-Interest Expense
Linked Quarter Change
(in $ millions)
205.8
212.5
205.4
2.9
2.3
1.1
0.5
(0.1)
209.2
0.4
3.3
2Q 2013
Non-
Operating
Comp. &
Benefits
Prof. &
Outside
Services
REO
Other
3Q 2013 |
 40
Efficiency Ratio (%)
Since 1Q 2010
76.1%
73.1%
72.4%
71.9%
64.7%
63.9%
63.3%
62.4%
63.6%
61.4%61.4%
63.0%
64.1%
62.7%
63.6%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013 |
 41
1.33
1.26
1.70
2.25
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
1Q 2013
2Q 2013
3Q 2013
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
Source: SNL Financial and Company filings |
 42
0.19
0.17
0.26
0.34
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
1Q 2013
2Q 2013
3Q 2013
PBCT
Peer Group Median
Top 50 Banks
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings
*
Excluding acquired loan charge-offs, PBCT’s charge-off ratio was
0.16% in 3Q 2013 and 0.18% in both 2Q 2013 and 1Q 2013 *
Since 1Q 2010
*
* |
 43
Operating ROAA (%)
Since 1Q 2010
0.60%
0.57%
0.48%
0.61%
0.85%
0.90%
0.96%
0.84%
0.86%
0.97%
0.91%
0.87%
0.77%
0.81%
0.78%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013 |
 44
Operating ROATE (%)
Since 1Q 2010
3.5%
3.4%
2.9%
4.0%
6.4%
6.9%
7.8%
7.2%
7.8%
8.9%
8.6%
8.6%
8.1%
9.3%
9.8%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013 |
 45
Operating Dividend Payout Ratio (%)
Since 1Q 2010
175%
180%
209%
157%
104%
98%
87%
96%
93%
82%
84%
85%
91%
83%
83%
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013 |
 46
Substantial Progress in the Midst of a Financial Crisis
Growing Loans, Deposits and Returning Capital to Shareholders
Growth has outpaced peers on the key metrics of loans per share and
deposits per share
This has occurred while we have returned $2.1BN to shareholders
during this period. Returns of capital were in the form of both
dividends ($1.1BN) and share repurchases ($1.0BN) which represents
approximately 45% of our current market capitalization
Line Item
PBCT
Peer
Median
PBCT Vs.
Peers
5-Year Loans Per Share CAGR
11.8%
-1.1%
+12.9%
5-Year Deposits Per Share CAGR
11.1%
2.2%
+8.9%
Notes:
5-Year CAGR figures based on 3Q 2008 to 3Q 2013 data; represents 19 of 20
peers reporting in 3Q 2013 |
 47
Notes:
1.
Calculated on a Basel I basis
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
Common
Equity
Tier
1
Capital
(calculated
for
3Q
2013
and
all
prior
periods
in
accordance
with
the
Basel
III
Final
Rule
issued
in
July
2013)
divided
by
Total
Risk-Weighted
Assets
on
a
Basel
I
basis
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%
Capital Ratios
Since 1Q 2010
1Q
2010
1Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
People’s United Financial
Tang. Com. Equity/Tang. Assets
18.7%
13.9%
11.7%
11.4%
11.2%
10.2%
9.6%
8.7%
8.5%
Leverage Ratio
1, 2, 6
19.2%
14.5%
12.1%
11.8%
11.5%
10.6%
10.0%
9.3%
9.2%
Tier 1 Common ³
23.9%
17.7%
14.3%
14.0%
14.0%
13.1%
12.4%
11.6%
11.4%
Tier 1 Risk-Based Capital
1, 4, 6
23.9%
17.9%
14.4%
14.1%
14.1%
13.2%
12.5%
11.6%
11.4%
Total Risk-Based Capital
1, 5, 6
25.6%
19.4%
16.0%
15.6%
15.6%
14.7%
13.7%
12.8%
12.6%
People’s United Bank
Leverage Ratio
1, 2, 6
12.3%
11.4%
11.0%
10.9%
10.8%
9.8%
9.7%
9.5%
9.5%
Tier 1 Risk-Based Capital
1, 4, 6
15.4%
13.9%
13.1%
13.0%
13.2%
12.2%
12.1%
11.9%
11.8%
Total Risk-Based Capital
1, 5, 6
16.3%
14.8%
14.0%
14.0%
14.1%
13.1%
13.5%
13.2%
13.2% |
 48
Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
1.01%
1.02%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Commercial
Banking
1.32%
0.31%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Retail Banking
Commercial ALLL -
$159.0 million
101% of Commercial NPLs
Retail ALLL -
$18.5 million
23% of Retail NPLs
Total ALLL -
$177.5 million
75% of Total NPLs
1.10%
0.82%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Total |
 49
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
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
3+
People’s United Bank, New York Times,
Starwood, PepsiCo
Bob Trautmann
SEVP & General Counsel
20+
People’s United Bank, Tyler Cooper & Alcorn
Management Committee |
 50
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 |
 51
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 acquired
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
|
 52
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
|
 53
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
************************* |