Attached files
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| 8-K - 8-K - People's United Financial, Inc. | d806529d8k.htm |
| EX-99.1 - EX-99.1 - People's United Financial, Inc. | d806529dex991.htm |
 3 Quarter 2014 Earnings Conference Call
October 16, 2014
Exhibit 99.2
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rd |
 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) changes in accounting and regulatory guidance applicable to
banks; (7) price levels and conditions in the public securities markets generally; (8)
competition and its effect on pricing, spending, third-party relationships and
revenues; and (9) 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
Third Quarter 2014 Results
Overview / 3Q 2014 vs. 2Q 2014
Operating earnings of $63.0 million or $0.21 per share, versus $0.20 per share in the
prior quarter
Net interest income on a fully taxable equivalent basis of $233.3 million, 2% growth
over the prior year
Net interest margin of 3.05%, down 8 basis points from 2Q 2014
Loan growth of $499 million, 8% annualized growth rate
Deposit growth of $1.2 billion, 19% annualized growth rate
-
Excluding brokered deposits, deposit growth of $272 million, 5% annualized growth
rate Non-interest income of $84.0 million versus $79.5 million in 2Q 2014,
excluding the gain on the merchant services joint venture
Operating expenses remain flat at $206.7 million
Efficiency ratio was 61.4% compared to 61.8% last quarter
Net charge-offs were 0.13% compared to 0.10% last quarter
|
 3
Net Interest Income (Fully Taxable Equivalent)
Linked Quarter Change
(in $ millions)
232.8
233.3
3.5
1.8
(2.8)
(0.4)
(0.3)
(1.3)
2Q 2014
Originated
Loans
Calendar
Day
Acquired
Loans
Borrowings
Investments
Deposits
3Q 2014 |
 4
Net Interest Margin (%)
Linked Quarter Change
3.13%
(0.06%)
(0.02%)
(0.01%)
(0.01%)
0.02%
3.05%
2Q 2014
New Loan
Volume &
Mix
Borrowings
Investments
Deposits
Calendar
Day
3Q 2014 |
   5
Loans
Linked Quarter Change
(in $ millions)
Annualized linked quarter change
7.8%
25,455
369
228
(98)
25,954
June 30, 2014
Commercial
Retail
Acquired
September 30, 2014 |
 6
Deposits
Linked Quarter Change
(in $ millions)
Total
25,261
Commercial
(1)
Retail
(2)
Annualized linked quarter change
19.5%
24,089
17,526
18,217
6,563
7,044
481
691
June 30, 2014
Retail
Commercial
September 30,
2014
Notes:
(1)
Commercial
includes
Municipal
deposits
of
$1,150MM
at
06/2014
and
$1,397MM
at
09/2014
(2)
Retail
includes
brokered
deposits
of
$1,328MM
at
06/2014
and
$2,228MM
at
09/2014 |
   7
79.5
(20.6)
2.0
1.2
1.1
0.5
(0.4)
0.1
84.0
20.6
-
2Q 2014
Non-
Operating¹
Insurance
Commercial
Banking
Lending
Fees
Gain on
Resi. Mtg
Loan
Sales
Bank
Service
Charges
Customer Int.
Rate Swap
Income
Other
3Q 2014
Non-Interest Income
Linked Quarter Change
(in $ millions)
Note:
(1)
Non-operating income represents the 2Q 2014 gain on the merchant services
joint venture, net of related expenses Total
Non-Operating
Operating
100.1
84.0 |
   8
Total
Non-Operating
Operating
Non-Interest Expense
Linked Quarter Change
(in $ millions)
206.7
0.5
(0.6)
0.4
0.1
0.1
206.7
1.6
2.1
2Q 2014
Non-
Operating
Prof. &
Outside
Svcs.
Adv. &
Promotion
Comp. &
Benefits
Other
3Q 2014
208.3
208.8 |
 9
Efficiency Ratio (%)
Last Five Quarters
62.2%
62.8%
63.9%
61.8%
61.4%
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014 |
 10
0.92
0.50
1.00
1.50
2.00
2.50
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 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
0.13
0.00
0.10
0.20
0.30
0.40
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 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
0.12%, 0.09%, 0.09%, 0.17% and 0.16% in 3Q 2014, 2Q 2014, 1Q 2014, 4Q 2013
and 3Q 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
$86.97
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$16
$17
$18
$19
$20
$21
$22
$23
$24
$25
$26
3Q13
4Q13
1Q14
2Q14
3Q14
Loans ($BN)
Loans per Share
$84.64
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$16
$17
$18
$19
$20
$21
$22
$23
$24
$25
$26
3Q13
4Q13
1Q14
2Q14
3Q14
Deposits ($BN)
Deposits per Share |
 13
Operating ROAA (%)
Last Five Quarters
0.78%
0.75%
0.69%
0.72%
0.74%
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014 |
 14
Operating ROATE (%)
Last Five Quarters
9.8%
9.8%
9.3%
9.6%
9.9%
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 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 accordance
with 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
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
People’s United Financial
Tang. Com. Equity/Tang. Assets
8.5%
7.9%
8.0%
7.9%
7.8%
Leverage Ratio
1, 5
9.2%
8.3%
8.4%
8.3%
8.1%
Tier 1 Common ²
11.4%
10.2%
10.1%
10.0%
9.9%
Tier 1 Risk-Based Capital
3, 5
11.4%
10.2%
10.1%
10.0%
9.9%
Total Risk-Based Capital
4, 5
12.6%
11.3%
11.2%
12.5%
12.3%
People’s United Bank
Leverage Ratio
1, 5
9.5%
9.1%
9.1%
9.0%
8.8%
Tier 1 Risk-Based Capital
3, 5
11.8%
11.1%
11.0%
10.8%
10.7%
Total Risk-Based Capital
4, 5
13.2%
12.4%
12.2%
13.5%
13.3% |
 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
(1)
-0.5%
2.8%
6.4%
-3.1%
2.1%
4.0%
-0.4%
1.8%
4.5%
-3.8%
2.7%
5.1%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Short End -25
Short End +100
Short End +200
Long End -100
Long End +100
Long End +200
Yield Curve Twist
9/30/14
6/30/14
-1.2%
4.7%
10.0%
14.5%
19.0%
-1.4%
4.3%
9.2%
13.2%
17.2%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Dn25
Up100
Up200
Up300
Up400
Immediate Parallel Shock
9/30/14
6/30/14 |
 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
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
Strong capital base |
 Appendix
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 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 9/30/14
(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)
$602.3
$175.4
$9.9
$42.8
23%
$27.1
Smithtown (11/30/10)
377.3
188.1
93.8
59.4
158%
129.3
Others (various dates)
200.4
49.9
16.0
14.1
113%
33.4
Total
$1,180.0
$413.4
$119.7
$116.3
(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
Impact on Net Interest Margin
Impact on Earnings Per Share
3Q14 Total Accretion (All interest income on acquired loans)
19
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 5.5
3Q14 Average Acquired Loan Portfolio
1,225
3Q14 Effective Tax Rate
32.5%
Effective Yield on Acquired Loan Portfolio
6.17%
3Q14 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
3.7
Weighted Average Coupon on Acquired Loan Portfolio
¹ 4.37%
3Q14 Weighted Average Shares Outstanding
298.4
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.80%
$0.01
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
5.5
3Q14 Average Earning Assets
30,556
Add: Average unamortized loan discount
2
143
Adjusted 3Q14 Average Earning Assets
2
30,699
Impact on Overall Net Interest Margin (bps)
7
Operating Net Interest Margin
3.05%
Adjusted Net Interest Margin
2.98%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
3Q14 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
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
4.26% 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
|
 21
Allowance for Loan Losses
Originated Portfolio Coverage Detail as of September 30, 2014
(in $ millions)
0.76%
0.92%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Commercial
Banking
0.88%
0.29%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Retail Banking
Commercial ALLL -
$166.0 million
120% of Commercial NPLs
Retail ALLL -
$19.0 million
32% of Retail NPLs
Total ALLL -
$185.0 million
94% of Total NPLs
0.79%
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%
86%
82%
78%
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 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
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