Attached files
| file | filename |
|---|---|
| 8-K - 8-K - People's United Financial, Inc. | d760420d8k.htm |
| EX-99.1 - EX-99.1 - People's United Financial, Inc. | d760420dex991.htm |
EXHIBIT 99.2
Investor Presentation dated July 17, 2014
 2
nd
Quarter 2014 Earnings Conference Call
July 17, 2014
********************** |
 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
Second Quarter 2014 Results
Overview / 2Q 2014 vs. 1Q 2014
Operating earnings of $59.9 million or $0.20 per share, versus $0.19 per share in
the prior quarter
Net interest income on a fully taxable equivalent basis of $232.8 million,
2% annualized growth rate
Net interest margin of 3.13%, down 4 basis points from 1Q 2014
Loan growth of $826 million, 13% annualized growth rate
Deposit growth of $423 million, 7% annualized growth rate
Non-interest income, excluding the $20.6 million merchant services joint venture
gain, was in-line with 1Q 2014 at $79.5 million
Operating expenses declined $4.8 million to $206.7 million
Efficiency ratio was 61.8% compared to 63.9% last quarter
Net charge-offs were 0.10% compared to 0.12% last quarter
Strengthened total risk-based capital levels
Bank issued $400 million of 10-year subordinated notes
|
 3
Net Interest Income (Fully Taxable Equivalent)
Linked Quarter Change
(in $ millions)
231.8
232.8
(1.6)
(1.0)
1.8
0.1
1.7
1Q 2014
Acquired
Loans
Investments
Originated
Loans
Calendar
Day
Borrowings
2Q 2014 |
 4
Net Interest Margin (%)
Linked Quarter Change
3.17%
3.13%
(0.07%)
(0.01%)
0.03%
0.01%
1Q 2014
New Loan
Volume
Investments
Calendar
Day
Loan
Mix
2Q 2014 |
   5
Loans
Linked Quarter Change
(in $ millions)
Annualized Linked QTD change
13.4%
24,629
881
78
(133)
25,455
March 31, 2014
Commercial
Retail
Acquired
June 30, 2014 |
 6
Deposits
Linked Quarter Change
(in $ millions)
Total
24,089
Commercial
(1)
Retail
(2)
Annualized Linked QTD change
7.2%
23,666
17,029
17,526
6,637
6,563
(74)
497
March 31, 2014
Retail
Commercial
June 30, 2014 |
  7
Non-Interest Income
Linked Quarter Change
(in $ millions)
Note:
(1)
Non-operating income represents the gain on the merchant services joint
venture, net of related expenses Total
Non-Operating
Operating
79.9
100.1
79.9
20.6
2.3
0.8
0.8
(1.4)
(1.4)
(0.9)
(0.8)
0.2
79.5
-
20.6
1Q 2014
Non-
Operating
Bank
Service
Charges
Investment
Mgmt.
Fees
Customer
Int. Rate
Swap
Income
Operating
Leases
Commercial
Banking
Lending
Fees
Insurance
Gain on
Resi. Mtg
Loan
Sales
Other
2Q 2014
(1) |
   8
Total
Non-Operating
Operating
Non-Interest Expense
Linked Quarter Change
(in $ millions)
Note:
(1)
Non-operating expense change primarily reflects the 1Q 2014 write-down on
certain branch assets 216.7
208.3
211.5
(3.6)
(2.4)
(1.8)
(1.4)
0.8
206.7
5.2
1.6
1Q 2014
Non-
Operating
Operating
Leases
Comp. &
Benefits
Occ. &
Equip.
Other
2Q 2014
(1) |
 9
Efficiency Ratio (%)
Last Five Quarters
61.4%
62.2%
62.8%
63.9%
61.8%
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014 |
 10
0.96
1.44
1.63
0.50
1.00
1.50
2.00
2.50
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
PBCT
Peer Group - Median
Top 50 Banks - Median
Last Five Quarters
Asset Quality
NPAs / Loans & REO (%)
(1)
(1)
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
Notes: Top 50 Banks represents the largest 50 banks by total assets in each
respective quarter |
 11
0.10
0.22
0.23
0.00
0.10
0.20
0.30
0.40
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
PBCT
Peer Group - Median
Top 50 Banks - Median
Asset Quality
Net Charge-Offs / Avg. Loans (%)
(1)
(1)
Excluding acquired loan charge-offs, PBCT’s charge-off ratio was
0.09%, 0.09%, 0.17%, 0.16% and 0.18% in 2Q 2014, 1Q 2014, 4Q 2013, 3Q 2013
and 2Q 2013, respectively Last Five Quarters
Source: SNL Financial and Company filings
Notes: Top 50 Banks represents the largest 50 banks by total assets in each
respective quarter |
 12
Loans
Deposits
Growing Future Earnings Per Share
Last Five Quarters |
 13
Operating ROAA (%)
Last Five Quarters
0.81%
0.78%
0.75%
0.69%
0.72%
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014 |
 14
Operating ROATE (%)
Last Five Quarters
9.3%
9.8%
9.8%
9.3%
9.6%
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014 |
 15
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
Common
Equity
Tier
1
Capital
(calculated
in
accordancewith
the
Basel
III
Final
Rule
issued
in
July
2013)
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
under
current
capital
rules
for
the
Bank
are:
Leverage
Ratio,
5%;
Tier
1
Risk-Based
Capital,
6%;
and
Total
Risk-Based
Capital,
10%
Capital Ratios
Last Five Quarters
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
People’s United Financial
Tang. Com. Equity/Tang. Assets
8.7%
8.5%
7.9%
8.0%
7.9%
Leverage Ratio
1, 5
9.3%
9.2%
8.3%
8.4%
8.3%
Tier 1 Common
2
11.6%
11.4%
10.2%
10.1%
10.0%
Tier 1 Risk-Based Capital
3, 5
11.6%
11.4%
10.2%
10.1%
10.0%
Total Risk-Based Capital
4, 5
12.8%
12.6%
11.3%
11.2%
12.5%
People’s United Bank
Leverage Ratio
1, 5
9.5%
9.5%
9.1%
9.1%
9.0%
Tier 1 Risk-Based Capital
3, 5
11.9%
11.8%
11.1%
11.0%
10.8%
Total Risk-Based Capital
4, 5
13.2%
13.2%
12.4%
12.2%
13.5% |
 16
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 |
 17
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
***********************************
*
*
*
*
*
*
*
* |
 19
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 6/30/14
(in $ millions)
Carrying
Amount
a, b
Carrying Amount Component
b
NPLs
c
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
d
Accretable
Yield
Non-Accretable
Difference
Danvers (7/1/11)
$651.5
$182.2
$10.1
$38.5
26%
$26.8
Smithtown (11/30/10)
400.5
195.8
94.6
62.0
153%
128.5
Others (various dates)
225.5
69.7
20.7
17.8
116%
33.2
Total
$1,277.5
$447.7
$125.4
$118.3
(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 $9.5MM of charge-offs applied against reserves
established subsequent to acquisition. |
 20
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
4.33% 2.
Adjusted to include the discount on acquired loans (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
2Q14 Total Accretion (All interest income on acquired loans)
22
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 6.4
2Q14 Average Acquired Loan Portfolio
1,355
2Q14 Effective Tax Rate
35.0%
Effective Yield on Acquired Loan Portfolio
6.40%
2Q14 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
4.2
Weighted Average Coupon on Acquired Loan Portfolio
1
4.51%
2Q14 Weighted Average Shares Outstanding
298.2
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.89%
2Q14 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.01
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
6.4
2Q14 Average Earning Assets
29,736
Add: Average unamortized loan discount
2
152
Adjusted 2Q14 Average Earning Assets
2
29,888
Impact on Overall Net Interest Margin (bps)
9
Operating Net Interest Margin
3.13%
Adjusted Net Interest Margin
3.04%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
|
 21
Allowance for Loan Losses
Originated Portfolio Coverage Detail as of June 30, 2014
(in $ millions)
0.77%
0.92%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Commercial
Banking
Commercial ALLL -
$163.5 million
120% of Commercial NPLs
Retail ALLL -
$19.0 million
30% of Retail NPLs
Total ALLL -
$182.5 million
92% of Total NPLs
0.82%
0.75%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Total |
 22
Operating Dividend Payout Ratio (%)
Last Five Quarters
83%
83%
83%
86%
82%
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014 |
 23
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 |
 For
more information, investors may contact: Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com
********************** |