Attached files
| file | filename |
|---|---|
| 8-K - 8-K - People's United Financial, Inc. | d879387d8k.htm |
 Investor Presentation
February 2015
NASDAQ: PBCT
Exhibit 99.1 |
 1
Forward-Looking Statement
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. |
 2
PBCT Differentiators
Premium brand built
Premium brand built
over 170 years
over 170 years
Deep focus on
Deep focus on
expense management
expense management
Breadth of products
Breadth of products
& services
& services
…with significant
…with significant
with significant
knowledge at the local
knowledge at the local
level
level
Experienced
Experienced
leadership team
leadership team
A Uniquely Positioned Franchise
Operate in large &
attractive Northeast
markets…
Commitment to
relationship-based
banking
defined underwriting
Conservative & well-
culture |
 3
PBCT: Compelling Investment Opportunity
Leading market position in one of the best commercial banking markets in the
U.S. Significant growth runway within existing markets –
expanding in two of the largest MSAs in the U.S.
New York City #1 and Boston #10
Ability to maintain pristine credit quality
Median net charge-offs/average loans since 2007 have been 18bps
Improving profitability
Five consecutive years of growth in operating earnings per share
Low operating risk profile
Consistently profitable throughout the credit cycle
Straightforward
and
diversified
portfolio
of
products
–
no
complex
financial
exposures
Robust liquidity
Strong deposit market share in most core markets
Unused FHLB of Boston borrowing capacity of $5.1 billion at December 31,
2014 Continued capital deployment via organic growth and dividends
Seventeen consecutive quarters of loan growth
Dividend yield of ~4.5% |
 4
Premium Brand Built Over 170 Years
1
Statistics as of December 31, 2014, unless noted otherwise
2
Exclusive relationship with Stop & Shop
3
Includes
12
ATMs
in
Stop
&
Shop
locations
where
a
branch
is
not
present
People’s United Financial, Inc.
NASDAQ (PBCT)
Headquarters
Bridgeport, CT
Chief Executive Officer
Jack Barnes
Chief Financial Officer
David Rosato
Market Capitalization
(02.19.2015)
$4.5 billion
Assets
$36.0 billion
Loans
$26.6 billion
Deposits
$26.1 billion
Branches
412
In-store Branches
(2)
153
ATMs
611
Standalone ATMs
(3)
103
Founded
1842
Corporate Overview
Corporate Overview |
 5
Premium Brand Built Over 170 Years
Acquired:
Equipment financing company
Financial Federal –
New York, NY
Acquired:
Butler
Bank
–
Lowell,
MA
RiverBank
–
North
Andover,
MA
Bank
of
Smithtown
–
Smithtown,
NY
Acquired:
Chittenden Corp. which comprised:
Chittenden
Bank
–
Burlington,
VT
Ocean
Bank
–
Portsmouth,
NH
Maine
Bank
&
Trust
–
Portland,
ME
Merrill
Bank
–
Bangor,
ME
Flagship
Bank
–
Worcester,
MA
Bank
of
West.
Mass.
–
Springfield,
MA
Acquired:
Danversbank –
Danvers, MA
Acquired:
57 branches in greater New York
metro area from RBS Citizens –
including 53 branches in Stop &
Shop supermarkets
Since 1995, PBCT has had an
exclusive relationship with Stop &
Shop to operate branches in
Connecticut stores
Geographic Expansion in Recent Years
Geographic Expansion in Recent Years
2008
2008
2010
2010
2011
2011
2012
2012 |
 6
Premium Brand Built Over 170 Years
•
Partnership allows us to leverage People’s United brand with the ~3.3 million
shoppers who visit Connecticut and New York 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
•
Connecticut and New York in-store branches accounted for a significant portion
of the new branch business booked in the market
Note: statistics represent Connecticut and New York branches only
In-Store Branches
Traditional Branches
100%
-
%
On average, in-store locations are open 37% more hours per week (56 hours vs.
41 hours), but are 30% less expensive to operate.
Last twelve months through December 31, 2014
60%
57%
43%
30%
20%
29%
29%
40%
43%
57%
70%
80%
71%
71%
Consumer Checking
Accounts Opened
Savings Accounts
Opened
Business Checking
Accounts Opened
Home Equity Loans
Originations
Mortgage Loan
Originations
Business Banking Loan
Originations
Investment Sales
In-Store Branches Versus Traditional Branches |
 Jack Barnes
President & CEO, Director
30+
People’s United Bank (SEVP, CAO),
Chittenden, FDIC
Galan Daukas
SEVP Wealth Management
25+
People’s United Bank, Washington Trust, The
Managers Funds, Harbor Capital Mgmt
Sara Longobardi
SEVP Retail Banking
20+
People’s United Bank
Dave Norton
SEVP & Chief HR Officer
5+
People’s United Bank, New York Times,
Starwood, PepsiCo
Lee Powlus
SEVP & Chief Administrative Officer
25+
People’s United Bank, Chittenden, Alltel
David Rosato
SEVP & CFO
25+
People’s United Bank, Webster, Allfirst
Chantal Simon
SEVP & Chief Risk Officer
25+
People’s United Bank, Merrill Lynch US Bank,
Lazard Freres & Co.
Jeff Tengel
SEVP Commercial Banking
30+
People’s United Bank, PNC, National City
Bob Trautmann
SEVP & General Counsel
20+
People’s United Bank, Tyler Cooper & Alcorn
Kirk Walters
SEVP Corporate Development,
Director
25+
People’s United Bank, Santander, Sovereign,
Chittenden, Northeast Financial
Name
Name
Position
Position
Years in Banking
Years in Banking
Professional Experience
Professional Experience
Experienced Leadership Team
7 |
 8
Operate in Large & Attractive Northeast Markets
Notes: The current national unemployment rate is 5.7%
The current national population density is 90 (#/sq miles)
Source: SNL Financial, US Census data
The population densities of NYC, Boston, Bridgeport and New Haven MSAs are each over
ten times the national average
NYC-Northern NJ-PA
Boston, MA
Hartford, CT
Bridgeport-Stamford, CT
New Haven, CT
Burlington, VT
•
Population: 20.0MM
•
Median HH Income: $64,538
•
Businesses: 810,883
•
Population Density (#/sq miles): 2,411
•
Unemployment Rate (%): 5.6
•
$100K+ Households (%): 31.5
•
Population: 4.7MM
•
Median HH Income: $71,190
•
Businesses: 203,770
•
Population Density (#/sq miles): 1,347
•
Unemployment Rate (%): 4.2
•
$100K+ Households (%): 34.8
•
Population: 1.2MM
•
Median HH Income: $67,457
•
Businesses: 52,315
•
Population Density (#/sq miles): 802
•
Unemployment Rate (%): 5.7
•
$100K+ Households (%): 31.0
•
Population: 944,000
•
Median HH Income: $78,095
•
Businesses: 49,392
•
Population Density (#/sq miles): 1,511
•
Unemployment Rate (%): 5.1
•
$100K+ Households (%): 39.6
•
Population: 862,000
•
Median HH Income: $61,762
•
Businesses: 36,800
•
Population Density (#/sq miles): 1,428
•
Unemployment Rate (%): 6.2
•
$100K+ Households (%): 28.0
•
Population: 215,000
•
Median HH Income: $65,440
•
Businesses: 10,846
•
Population Density (#/sq miles): 172
•
Unemployment Rate (%): 3.5
•
$100K+ Households (%): 27.4 |
  9
Operate in Large & Attractive Northeast Markets
People’s United’s Franchise Metrics
1
MSA Rank
(Out of 917 MSAs Nationwide)
75% of PBCT’s deposits are in its top 5 MSAs, which are some of the
most densely populated and wealthy markets in the U.S.
Source: SNL Financial; Nielsen; FDIC data as of June 30, 2014
1.
Excludes
deposits
from
trust
institutions
and
branches
with
over
$750
million
deposits;
excludes branches and deposits located outside each MSA
2.
Rank weighted by percentage of franchise deposits
Market Size
Population
Median
% Households
People's United Top 5 MSAs
Total Deposits
Market
% Deposit
Deposits
% of
Density
Household
with $200k+
($ in millions)
Rank
Market Share
($ in millions)
Franchise
(# / sq. mile)
Income
Income
Bridgeport-Stamford-Norwalk, CT
$35,390
1
17.9%
$6,347
28.8
6
7
2
New York-Newark-Jersey City, NY-NJ-PA
613,008
20
0.5
3,041
13.8
2
34
12
Boston-Cambridge-Newton, MA-NH
131,242
8
2.1
2,784
12.6
8
18
9
Hartford-West Hartford-East Hartford, CT
26,759
4
8.7
2,324
10.6
20
26
21
New Haven-Milford, CT
18,045
4
11.7
2,104
9.6
7
49
34
Top 5 MSAs
$824,444
–
2.0%
$16,600
75.4
–
–
–
Weighted Average Rank ²
–
–
–
–
8
22
12
Rank / Nationwide MSAs (917 MSAs)
–
–
–
–
0.8%
2.4%
1.3% |
 10
($ in billions)
Connecticut
$7.2 / 27%
Massachusetts
$4.7 / 18%
New Hampshire
$1.4 / 5%
Other
$4.5 / 17%
New York
$5.2 / 19%
Vermont
$1.8 / 7%
New Jersey
$0.9 / 3%
Maine
$0.9 / 4%
Operate in Large & Attractive Northeast Markets
Total Loan Portfolio: $26.6 Billion
Total Loan Portfolio: $26.6 Billion
At December 31, 2014
At December 31, 2014
Excluding equipment finance loans, ~92% of PBCT’s loan portfolio is within the
Northeast |
 11
Source: SNL Financial; FDIC data as of June 30, 2014; excludes trust institutions;
excludes non-retail branches Notes: PBCT branch count updated as of
December 31, 2014 Operate in Large & Attractive Northeast Markets
Connecticut
Connecticut
Massachusetts
Massachusetts
Vermont
Vermont
New York
New York
New Hampshire
New Hampshire
Maine
Maine
•
5
th
in deposit market share in New England
–
# 1 in Fairfield County, CT., 65 branches, $7.7 billion in deposits, 20.9% market
share Strong deposit market positions
Branches
$BN
%
1
B of A
238
61.0
25.4
2
RBS
247
27.5
11.4
3
Santander
226
20.1
8.4
4
TD Bank
150
11.5
4.8
5
Eastern Bank
94
7.2
3.0
6
Independent Bank
86
5.7
2.4
7
First Republic
4
4.7
1.9
8
Middlesex
54
3.5
1.5
9
Boston Private
11
3.4
1.4
10
People's United
53
3.2
1.3
Branches
$BN
%
1
People's United
42
2.7
22.7
2
TD Bank
33
2.5
21.3
3
Merchants
32
1.3
11.2
4
RBS
20
0.8
6.7
5
KeyCorp
13
0.7
5.7
6
Northfield
13
0.5
4.5
7
Community
14
0.5
3.9
8
Union
12
0.4
3.6
9
Passumpsic
6
0.3
3.0
10
Berkshire Hills
6
0.3
2.7
Branches
$BN
%
1
RBS
73
6.9
24.1
2
TD Bank
72
5.7
19.9
3
B of A
26
4.4
15.4
4
People's United
28
1.4
4.8
5
NH Mutual
19
1.1
3.8
6
BNH
22
1.0
3.4
7
Santander
20
0.8
2.9
8
NH Thrift
21
0.8
2.9
9
Eastern Bank
6
0.8
2.7
10
Mascoma
18
0.7
2.6
Branches
$BN
%
1
TD Bank
50
3.2
13.3
2
KeyCorp
53
3.0
12.6
3
Bangor Bancorp
59
2.1
8.9
4
Camden National
44
1.9
7.9
5
B of A
18
1.6
6.8
6
First Bancorp
16
1.0
4.3
7
Machias
17
0.9
3.8
8
People's United
26
0.9
3.7
9
Bar Harbor
16
0.8
3.5
10
Norway
24
0.8
3.4
Branches
$BN
%
1
B of A
146
29.1
25.9
2
Webster
123
13.2
11.8
3
People's United
162
13.0
11.5
4
Wells Fargo
75
8.5
7.6
5
TD Bank
75
6.3
5.6
6
JPM Chase
53
4.9
4.4
7
First Niagara
76
3.9
3.5
8
Citi
17
3.2
2.9
9
Liberty
49
2.9
2.6
10
RBS
46
2.5
2.2
Branches
$BN
%
1
JPM Chase
799
461.2
37.9
2
Citi
271
79.8
6.6
3
HSBC
149
72.5
6.0
4
B of A
309
65.8
5.4
5
Capital One
264
42.5
3.5
6
M&T
289
39.1
3.2
7
TD Bank
255
27.0
2.2
8
Wells Fargo
87
22.1
1.8
9
Signature
27
18.5
1.5
10
KeyCorp
238
18.1
1.5
27
People's United
101
3.0
0.3 |
 12
Commitment to Relationship-Based Banking
Offer the superior customer service that is more characteristic of a
community oriented bank…
•
Approximately
850,000
commercial,
business
banking,
consumer
and
wealth management
relationships
•
Long-term relationships with customers
•
Customers relationships are with local management
•
Single point of contact with customers –
break down silos to present full suite of products and
services
•
Senior management frequently interacts with customers
•
Reputation and word-of-mouth referrals often drive new business
•
Broad distribution: 400+ branches across six states, 600+ ATMs, online and mobile
banking •
Call center operations locally located in Bridgeport, CT and Burlington, VT
|
 13
Breadth of Products & Services
Commercial
Commercial
Banking
Banking
Retail
Retail
Banking
Banking
Wealth
Wealth
Management
Management
…while providing the same full breadth of solutions as large banks
•
Commercial
Lending:
commercial
finance,
real
estate
financing,
equipment
loans
&
leasing,
asset
based
lending,
mortgage
warehouse
lending
•
Deposit
Products:
checking
accounts,
savings
and
money
markets
accounts
•
Treasury
Management:
cash
management
services,
Online
banking
eTreasury+,
ACH
services,
lockbox
services,
remote
deposit
capture,
merchant
card
processing,
payroll
services,
fraud
protection
services,
liquidity
and
investment
solutions
•
Specialty
Services:
government
banking,
healthcare
&
non-profit
banking,
interest
rate
risk
management,
international
services,
business
aircraft
finance
•
Insurance:
commercial
coverage,
employee
benefits,
bonding,
risk
management
services,
specialized
industry
insurance
•
Retail
Lending:
residential
mortgages,
home
equity
loans
and
lines
of
credit,
personal
loans
•
Deposit
Products:
checking
accounts,
savings
and
money
markets
accounts
•
Services:
mobile
banking,
online
banking,
credit
cards
•
Wealth
Services
&
Solutions:
financial
planning,
trust
&
estate
solutions,
investment
management,
private
banking,
self-directed
investing,
retirement
plan
services,
institutional
trust
services |
 14
Total Loan Portfolio: $26.6 Billion
Total Loan Portfolio: $26.6 Billion
At December 31, 2014
At December 31, 2014
Commercial
Commercial
$19.5 Billion / 73%
$19.5 Billion / 73%
Breadth of Products & Services
Retail
Retail
$7.1 Billion / 27%
$7.1 Billion / 27% |
 Transp. / Utility
$0.2 / 3%
Arts/Ent./Rec.
$0.1 / 2%
Construction
$0.2 / 3%
Other Prop.
$0.1 / 1%
15
Commercial Real Estate
Commercial Real Estate
$9.4 Billion / 35% of Total Portfolio
$9.4 Billion / 35% of Total Portfolio
(At December 31, 2014)
Commercial & Industrial
Commercial & Industrial
$7.2 Billion / 27% of Total Portfolio
$7.2 Billion / 27% of Total Portfolio
Equipment Financing
Equipment Financing
$2.9 Billion / 11% of Total Portfolio
$2.9 Billion / 11% of Total Portfolio
Commercial
Loans:
$19.5
Billion
/
73%
of
Total
Portfolio
($ in billions)
($ in billions)
($ in billions)
Retail
Retail
$2.4 / 26%
$2.4 / 26%
Office Buildings
Office Buildings
$2.2 / 23%
$2.2 / 23%
Land
$0.1 / 1%
Self Storage
$0.1 / 1%
Mixed / Special Use
$0.2 / 2%
Hosp. & Entertain.
$0.4 / 4%
Industrial /
Manufacturing
$0.5 / 6%
Finance
Finance
$1.3 / 19%
$1.3 / 19%
Service
Service
$1.3 / 19%
$1.3 / 19%
Manufacturing
Manufacturing
$1.0 / 13%
$1.0 / 13%
Wholesale Dist.
Wholesale Dist.
$0.8/ 11%
$0.8/ 11%
Health
Health
$0.7 / 10%
$0.7 / 10%
Retail
Retail
Sales
Sales
$0.6 / 8%
$0.6 / 8%
Information
$0.1 / 1%
Public Admin.
$0.1 / 1%
Packaging
$0.1 / 5%
Transportation
& Utilities
$1.0 / 35%
Construction
Construction
$0.4 / 13%
$0.4 / 13%
Finance,
Finance,
Ins. & RE
Ins. & RE
$0.3 / 12%
$0.3 / 12%
Waste
Waste
$0.2 / 8%
$0.2 / 8%
Printing
Printing
$0.2 / 7%
$0.2 / 7%
Manufacturing
Manufacturing
$0.2 / 6%
$0.2 / 6%
Wholesale
Wholesale
Dist.
Dist.
$0.2 / 5%
$0.2 / 5%
Mining, Oil & Gas
$0.1 / 4%
Service
$0.1 / 3%
Other
$0.1 / 2%
Breadth of Products & Services
Broadly diversified commercial loan portfolio
Insurance &
Insurance &
Real Estate
Real Estate
$0.8 / 10%
$0.8 / 10%
Residential
(Multi-Family)
$3.4 / 36% |
 16
Residential Mortgage
Residential Mortgage
$4.9 Billion / 19% of Total Portfolio
$4.9 Billion / 19% of Total Portfolio
(At December 31, 2014)
Retail
Loans:
$7.1
Billion
/
27%
of
Total
Portfolio
($ in billions)
($ in billions)
Consumer
Consumer
$2.2 Billion / 8% of Total Portfolio
$2.2 Billion / 8% of Total Portfolio
FY 2014 originated weighted average LTV of 70%
FY 2014 originated weighted average FICO score of 756
Hybrid ARMs represent ~90% of the portfolio
FY 2014 originated weighted average CLTV of 59%
FY 2014 originated weighted average FICO score of 767
~60% of originations during last 3 years are in a first lien position
New York
New York
$0.4 / 9%
$0.4 / 9%
Vermont
Vermont
$0.3 / 6%
$0.3 / 6%
Massachusetts
Massachusetts
$1.4 / 28%
$1.4 / 28%
Connecticut
Connecticut
$2.4 / 48%
$2.4 / 48%
Connecticut
Connecticut
$1.3 / 60%
$1.3 / 60%
Vermont
Vermont
$0.3 / 11%
$0.3 / 11%
New York
New York
$0.2 / 9%
$0.2 / 9%
Massachusetts
Massachusetts
$0.2 / 8%
$0.2 / 8%
New Hampshire
$0.2 / 4%
Maine
$0.1 / 3%
Other
$0.1 / 2%
New Hampshire
$0.1 / 6%
Maine
$0.1 / 6%
Breadth of Products & Services |
 17
Conservative & Well-Defined Underwriting Culture
•
Credit culture and underwriting standards
Cash
flow
–
deal
specific
and
global
Collateral / limited unsecured exposure with equity investment requirements and
guarantees No speculative real estate projects
•
Credit structure includes meaningful covenants, appropriate LTVs
and monitored advance rates
•
Industry knowledge and expertise (i.e. basic industries and property types)
•
Seasoned relationship managers with considerable local market knowledge
•
Experienced senior credit officers (SCO) average 25+ years of commercial banking
experience •
Approval authority
Local, regional and corporate credit committee structure
>$25 million also requires Executive Risk Oversight Committee approval
•
Due diligence begins prior to the issuance of a proposal (market
manager & SCO) and independent credit
associates in Risk Management are utilized
•
Credit analyst / relationship manager complete detailed loan submission
•
Stress test cash flow for interest rate sensitivities, vacancy and rental rates
•
Independent field exams and appraisal review
Commercial Credit Culture & Approval Process
Commercial Credit Culture & Approval Process |
 18
Conservative & Well-Defined Underwriting Culture
0.24%
PBCT
Median, excluding PBCT = 0.69%
Average Annual Net Charge-Offs / Average Loans
Peer Group Comparison 2010-2014
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Conservative underwriting is a hallmark of People’s United
|
 19
Deep Focus on Expense Management
•
EMOC has been fully operational since November 2011
Committee comprised of the CEO, CFO, Chief Administrative Officer and Chief HR
Officer •
EMOC oversees:
Non-interest expense management and implements strategies to attain targeted
goals Revenue initiatives that require expenditures and conducts periodic
progress reviews •
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
Expense Management Oversight Committee (EMOC)
Expense Management Oversight Committee (EMOC)
Proactive expense management approach |
 20
Deep Focus on Expense Management
•
People’s United has managed expenses while also making significant investments
in: –
People
and
systems
amidst
a
regulatory
environment
of
heightened
expectations
–
Revenue and deposit gathering initiatives
–
Improving
customer
experiences
via
enhanced
delivery
of
products
and
services
Operating Non-Interest Expenses
Operating expenses have remained flat despite continued strategic
investments and increasing regulatory compliance costs
$204.5
$204.0
$205.4
$209.2
$207.7
$211.5
$206.7
$206.7
$207.1
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
4Q'14 |
 21
•
Bolstering commercial banking presence in Massachusetts and New York
•
Building large-corporate and government banking productivity
•
Filling in New York metro Commercial Real Estate presence
•
Continuing to leverage investment in asset-based lending
•
Focusing on deposit gathering capabilities
•
Growing wealth management fee income
•
Increasing momentum in other fee income businesses
–
Transitioning Insurance to a more specialized model
–
Delivering interest rate swaps and foreign exchange products to corporate
customers –
Expanding international trade finance
–
Growing commercial banking lending fees
–
Investing in competitive cash management products
Significant Opportunities
Growing in larger markets (New York metro & greater Boston), while deepening
presence in heritage markets such as Connecticut and Vermont
These significant opportunities expected to provide earnings growth for years to
come |
 22
Building the Franchise for the Long-Term
•
Increase focus on relationship profitability
–
Continue to build deep, multi-product relationships with an emphasis on
cross-sell –
Deposit gathering remains a key focus and is reflected in incentive
structure •
Maintain pristine asset quality
•
Tightly control expenses while investing in key infrastructure
•
Maintain asset sensitivity to position People’s United for rising interest
rates Committed to delivering value to both customers and shareholders
|
 Full Year and Fourth Quarter 2014 Results |
 24
Full Year 2014 Overview
•
Operating earnings of $245 million or $0.82 per share, an increase from $241
million or $0.77 per share
Fifth consecutive year of growth in operating earnings per share
•
Net
interest
income
1
of
$912
million,
an
increase
of
3%
•
Net interest margin of 3.09%, a decrease of 22 basis points
•
Loan growth of $2.2 billion, or 9%, to $26.6 billion
•
Deposit growth of $3.6 billion, or 16% to $26.1 billion
Excluding brokered deposits, deposit growth of $1.1 billion, or 5%
•
Non-interest income, excluding the $20.6 million gain on the merchant services
joint venture, of $330 million compared to $342 million
•
Operating expenses remained flat at $832 million
•
Efficiency ratio was 62.1%, an improvement from 62.3%
•
Asset quality remained strong with net loan charge-offs at 0.12%, compared to
0.19% (All comparisons versus full year 2013)
1
Net interest income on a fully taxable equivalent basis was $931 million, an increase of 3%.
|
 25
Net Interest Income
1
($ in millions)
Annual Change
Annual Change
$65.1
$7.2
($46.1)
($3.1)
$888.6
$911.9
$0.2
1
FY 2013
Originated Loans
Investments
Deposits
Acquired..
Borrowings
FY 2014
Net interest income on a fully taxable equivalent basis for 2013 and 2014 was $905.8 million
and $931.1 million, respectively. |
 26
Net Interest Margin
Annual Change
Annual Change
(0.21%)
(0.01%)
3.31%
3.09%
FY 2013
New Loan Volume & Mix
Borrowings
FY 2014 |
 27
Non-Interest Income
($ in millions)
Annual Change
$20.6
$7.1
($5.8)
$341.7
($11.9)
$330.2
($6.6)
Operating
Non-Operating
1
Non-operating income represents the 2Q 2014 gain on the merchant services
joint venture, net of related expenses $4.4
$1.3
$20.6
$20.6
$350.8
$341.7
-
1
FY 2013
Non-Operating
Operating
Leases
Investment
Management
Revenues
Gains on
Residential
Mortgage Loans
Gains on
Acquired Loans
Commercial Banking
Other
FY 2014 |
 28
Non-Interest Expense
($ in millions)
Annual Change
($3.2)
$826.3
$8.2
$6.1
$832.0
$12.7
$839.0
$841.5
Operating
Non-Operating
$9.5
($2.4)
($1.2)
($5.0)
FY 2013
Non-Operating
Advertising
& Promotion
Professional
& Outside
Services
Compensation
& Benefits
Operating Leases
Other
FY 2014 |
 29
2015 Goals
•
Loan growth in the high-single to low-double digits
•
Deposit growth in the mid to high-single digits
•
Net interest income growth in the low to mid-single digits
•
Net interest margin range of 2.85% -
2.95%
•
Non-interest income¹
growth in the low-single digits
•
Full year operating expense range of $835 million to $845 million
•
Maintain excellent credit quality & strong capital levels
1
Adjusted for 2014 non-operating gain on the merchant services joint venture
|
 30
Fourth Quarter 2014 Overview
•
Operating
earnings
of
$65.1
million
or
$0.22
per
share,
compared
to
$63.0
million
or
$0.21
per
share
•
Net interest income¹
of $228 million, consistent with the third quarter of 2014
•
Net interest margin of 3.00%, a decrease of 5 basis points
•
Loan growth of $638 million, 10% annualized growth rate
•
Deposit growth of $877 million, 14% annualized growth rate
–
Excluding brokered deposits, deposit growth of $472 million, 8% annualized growth
rate •
Non-interest income of $86.8 million, increased from $84.0 million
•
Efficiency ratio was 61.3%, improved from 61.4%
•
Net loan charge-offs were 0.13%, consistent with the third quarter 2014
(All comparisons versus third quarter 2014)
1
•
Operating expenses remained flat at $207 million
Net interest income on a fully taxable equivalent basis was $233 million, consistent with the third
quarter of 2014. |
 31
Net Interest Income¹
($ in millions)
Linked Quarter Change
$2.2
$0.4
($1.9)
($1.5)
$228.5
$228.1
$0.4
1
Net interest income on a fully taxable equivalent basis for 3Q 2014 and 4Q 2014
was $233.3 million and $233.2 million, respectively.
3Q 2014
Originated
Loans
Investments
Borrowings
Acquired
Loans
Deposits
4Q 2014 |
 32
Net Interest Margin
Linked Quarter Change
(0.05%)
(0.02%)
0.01%
0.01%
3.05%
3.00%
3Q 2014
New Loan Volume
Deposits
Borrowings
Investments
4Q 2014 |
 33
Loans
($ in millions)
Linked Quarter Change
$554
$213
($129)
$25,954
$26,592
Annualized linked quarter change: +9.8%
September 30, 2014
Commercial
Retail
Acquired
December 31, 2014 |
 34
Deposits
Linked Quarter Change
$709
$168
($ in millions)
Annualized linked quarter change: +13.9%
$25,261
$26,138
1
Commercial includes Municipal deposits of $1,397 at 09/30/2014 and $1,458 at
12/31/2014 2
Retail includes brokered deposits of $2,228 at 09/30/2014 and $2,633 at
12/31/2014 September 30, 2014
Retail
Commercial
December 31, 2014
Commercial¹
$7,044
Commercial¹
$7,212
Retail²
$18,217
Retail²
$18,926 |
 35
Non-Interest Income
($ in millions)
Linked Quarter Change
$2.5
$2.4
$84.0
$1.4
$86.8
($2.2)
($1.3)
3Q 2014
Net Security Gains
Customer Interest
Rate Swap Income
Insurance
Bank Service Charges
Other
4Q 2014 |
 36
Non-Interest Expense
($ in millions)
Linked Quarter Change
($1.0)
$206.7
$0.9
$0.5
$207.1
$2.1
$208.8
$207.7
Operating
Non-Operating
$0.6
($1.5)
3Q 2014
Non-Operating
Regulatory
Assessments
Professional & Outside
Services
Other
4Q 2014 |
 37
Efficiency Ratio
62.8%
63.9%
61.8%
61.4%
61.3%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014 |
 38
Asset Quality
NPAs / Loans & REO (%)
NPAs / Loans & REO (%)
1
1
1
Source: SNL Financial and Company filings
Notes: Top 50 Banks represents the largest 50 banks by total assets in each
respective quarter PBCT
Peer Group (Median)
Top 50 Banks (Median)
0.88
0.5
1.0
1.5
2.0
2.5
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Non-performing assets (excluding acquired non-performing loans) as a percentage of
originated loans plus all REO and repossessed
assets; acquired non-performing loans excluded as risk of loss has been considered by virtue of
(i) our estimate of acquisition-date fair
value, (ii) the existence of an FDIC loss sharing agreement, and/or (iii) allowance for loan losses
established subsequent to acquisition |
 39
Asset Quality
1
Excluding acquired loan charge-offs, PBCT’s charge-off ratio was
0.13%, 0.12%, 0.09%, 0.09%, and 0.17% in 4Q 2014, 3Q 2014, 2Q 2014,
1Q 2014, and 4Q 2013, respectively
Source: SNL Financial and Company filings.
Notes: Top 50 Banks represents the largest 50 banks by total assets in each
respective quarter PBCT
Peer Group (Median)
Top 50 Banks (Median)
0.4
0.3
0.2
0.1
0.0
0.13
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Net Charge-Offs / Average Loans (%)
1 |
 40
Growing Future Earnings Per Share
Loans
Loans
Deposits
Deposits
Deposits per Share
Loans per Share
Loans ($ in billions)
Deposits ($ in billions)
$89.04
$45
$55
$65
$75
$85
$95
$18
$20
$22
$24
$26
$28
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
$18
$20
$22
$24
$16
$18
$20
$22
$24
$87.52
$45
$55
$65
$75
$85
$95
$16
$18
$20
$22
$24
$26
$28
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014 |
 41
Operating Return on Average Assets
0.75%
0.69%
0.72%
0.74%
0.75%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014 |
 42
Operating Return on Average Tangible Equity
9.8%
9.3%
9.6%
9.9%
10.1%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014 |
 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)
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
Tier 1 Risk-Based Capital represents Tier 1 Capital divided by Total Risk-Weighted Assets 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 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%
43
Capital Ratios
Notes:
1.
2.
3.
4.
5.
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
People’s United Financial
Tang. Com. Equity/Tang. Assets
7.9%
8.0%
7.9%
7.8%
7.5%
Leverage Ratio
1, 5
8.3%
8.4%
8.3%
8.1%
7.9%
Tier 1 Common
2
10.2%
10.1%
10.0%
9.9%
9.8%
Tier 1 Risk-Based Capital
3, 5
10.2%
10.1%
10.0%
9.9%
9.8%
Total Risk-Based Capital
4, 5
11.3%
11.2%
12.5%
12.3%
12.2%
People’s United Bank
Leverage Ratio
1, 5
9.1%
9.1%
9.0%
8.8%
8.5%
Tier 1 Risk-Based Capital
3, 5
11.1%
11.0%
10.8%
10.7%
10.5%
Total Risk-Based Capital
4, 5
12.4%
12.2%
13.5%
13.3%
13.1% |
 44
Interest Rate Risk Profile
Net Interest Income (NII) Sensitivity
Net Interest Income (NII) Sensitivity
1
Immediate Parallel Shock
Est. Change in NII
Yield Curve Twist
1
Est. Change in NII
Dec. 31, 2014
Sept. 30, 2014
-1.1%
3.4%
6.9%
9.2%
11.1%
-1.2%
4.7%
10.0%
14.5%
19.0%
Down 25
Up 100
Up 200
Up 300
Up 400
-0.2%
1.1%
2.7%
4.1%
2.6%
4.9%
0.5%
2.8%
6.4%
3.1%
2.1%
4.0%
Short End
25
Short End +100
Short End +200
Long End
100
Long End +100
Long End +200
-
-
-
-
-
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. |
 Appendix |
 46
Asset Quality
Originated Portfolio Coverage Detail as of December 31, 2014
ALLLs / Loans
ALLLs / Loans
NPLs / Loans
NPLs / Loans
ALLLs / NPLs
ALLLs / NPLs
Note –
ALLLs: Commercial: $169 million, Retail: $19 million, Total: $188 million
0.91%
0.27%
0.74%
Commercial
Retail
Total
0.76%
0.81%
0.77%
Commercial
Retail
Total
120%
33%
95%
Commercial
Retail
Total |
 47
Securities Portfolio Detail
Note:
Duration of the securities portfolio is ~4 years
Agency CMO’s
$1.8 / 37%
Agency MBS & Agency CMOs comprised of 10-yr & 15-yr collateral
constitute ~80% of the portfolio. Municipal bond portfolio has an underlying
weighted average credit rating above AA .
Securities Portfolio: $4.9 Billion
Securities Portfolio: $4.9 Billion
At December 31, 2014
At December 31, 2014
($ in billions)
Agency MBS
$2.0 / 41%
Municipal -
HTM
$0.8 / 17%
FHLB Stock
$0.2 / 4%
Bonds, Notes & Debentures
$0.1 / 1%
Securities portfolio does not contain CLOs, CDOs, trust preferred, or
private-label mortgage-backed securities Held to maturity (HTM)
securities reported on an amortized cost basis (book value). Available for sale (AFS) securities
reported at fair value |
 48
Balance Sheet Funding
79% funded by organic deposits, customer repurchase agreements and common
equity .
Balance Sheeting Funding: $36.0 Billion
At December 31, 2014
($ in billions)
Retail Deposits
$16.3 / 45%
Brokered Deposits
$2.6 / 7%
Commercial Deposits
$7.2 / 20%
Shareholders’
Equity
$4.6 / 13%
Fed Funds & FHLB
Borrowings
$3.2 / 9%
Subordinated Borrowings
& Senior Notes
$1.0 / 3%
Customer Repurchase
Agreements
$0.5 / 1%
Other Liabilities
$0.6 / 2% |
 49
Operating Dividend Payout Ratio
83%
86%
82%
78%
76%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014 |
 50
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 (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. As of 12/31/14
(in $ millions)
Carrying
Amount
a, b
Carrying Amount Component
b
Accretable
Yield
Non-Accretable
Difference
NPLs
c
Non-Accretable
Difference/NPLs
Charge-offs
Incurred Since
Acquisition
d
Danvers (7/1/11)
Smithtown (11/30/10)
Others (various dates)
Total
$554.6
313.2
183.1
$1,050.9
$169.2
181.1
46.0
$396.3
$9.4
89.7
15.9
$115.0
$35.7
54.9
13.0
$103.6
26%
163%
122%
$27.5
130.2
33.6 |
 51
Acquired Loan Portfolio
($ in millions)
Amortization of Original Discount on Acquired Loan Portfolio
1
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) Impact on Net Interest Margin
Impact on Earnings Per Share
4Q14 Total Accretion (All interest income on acquired loans)
17
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 4.8
4Q14 Average Acquired Loan Portfolio
1,121
4Q14 Effective Tax Rate
33.5%
Effective Yield on Acquired Loan Portfolio
6.07%
4Q14 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
3.2
Weighted Average Coupon on Acquired Loan Portfolio
4.35%
4Q14 Weighted Average Shares Outstanding
298.6
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.72%
4Q14 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.01
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
4.8
4Q14 Average Earning Assets
31,130
Add: Average unamortized loan discount
1
139
Adjusted 4Q14 Average Earning Assets
31,269
Impact on Overall Net Interest Margin (bps)
6
Net Interest Margin
3.00%
Adjusted Net Interest Margin
2.94%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
1 |
 52
Peer Group
Firm
Ticker
City
State
1
Associated
ASB
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 |
 53
Non-GAAP Financial Measures and Reconciliation to GAAP
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). In addition, operating lease expense is excluded from total
non-interest expense and netted against operating lease income within
non-interest income to conform with the reporting approach applied to our other fee-
based businesses that are already presented on a net basis. 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.
|
 54
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, non-recurring gains/losses, merger-related expenses (including acquisition
integration and other costs), 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. 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. |
 For more information, investors may contact:
Andrew S. Hersom
(203) 338-4581
andrew.hersom@ peoples.com
NASDAQ: PBCT |