Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - People's United Financial, Inc. | d574258d8k.htm |
 Investor Presentation
July/August 2013
Investor Contact:
Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com
Exhibit 99.1 |
 Certain statements contained in this release are forward-looking in nature.
These include all statements about People's United Financial's plans,
objectives, expectations and other statements that are not historical facts,
and usually use words such as "expect," "anticipate," "believe," "should" and similar
expressions. Such statements represent management's current beliefs, based upon
information available at the time the statements are made, with regard to
the matters addressed. All forward-looking statements are
subject
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
1 |
 Table of
Contents 1.
Strategic Position
2.
Income Statement Improvements
3.
Interest Rate Risk Profile
4.
Summary
5.
Appendix
2 |
 Strategic Position |
 Corporate Overview
Snapshot as of June 30, 2013
People’s United Financial, Inc.
NASDAQ (PBCT)
Headquarters:
Bridgeport, CT
Chief Executive Officer:
Jack Barnes
Chief Financial Officer:
Kirk Walters
Market Capitalization (7/25/13):
$4.9 billion
Assets:
$31.3 billion
Loans:
$22.9 billion
Deposits:
$22.0 billion
Branches:
418
ATMs:
638
Standalone ATMs:*
109
Founded:
1842
* Includes 25 ATMs in Stop & Shop locations where a branch is not
present 4 |
 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
8.7%
vs.
~8.0%
for
peers
5 |
 Retail
& Business Banking Franchise Distribution
400+ branches over 6 states
•
~33% of branches are in-store
600+ ATMs
Online & mobile banking
Call center operations located in Bridgeport,
CT and Burlington, VT
Scale
5
in deposit market share in New England *
Customer base
Approximately 800,000 commercial, business
banking and consumer relationships
* Source: SNL Financial
6
th |
 Strategic Focus of Deposit Franchise
Growth
Core customers and deposits
Multiple product households
Leverage employee expertise to drive sales
Brand execution
Employee expertise
Superior customer experience
In-store supermarket strategy
Leveraging the Citizen’s branch acquisition
Navigating a low rate environment
Balancing growth, retention and cost of funds
Constant evaluation of branch-level profitability
•
Consolidated 18 branches in 2011 and 2012, or ~5% of our franchise, which is
in-line with peers •
Selective de novo branches in key markets: Prudential Center in Boston, MA;
Lexington, MA; Wellesley, MA; and Park Ave in Manhattan
7 |
 8
Deepening Market Presence
Connecticut
Massachusetts
Vermont
New York
New Hampshire
Maine
Source: SNL Financial
Branches
$BN
%
1
B of A
151
24.4
24.0
2
Webster
123
12.0
11.8
3
People's United
165
10.9
10.8
4
Wells Fargo
76
7.3
7.2
5
TD Bank
81
5.9
5.8
6
First Niagara
85
4.6
4.5
7
JPM Chase
53
4.5
4.4
8
Citi
20
3.0
2.9
9
Liberty
48
2.9
2.8
10
RBS
47
2.5
2.5
Branches
$BN
%
1
B of A
255
54.3
20.0
2
RBS
253
30.9
11.4
3
Santander
229
18.9
7.0
4
TD Bank
157
10.6
3.9
5
Eastern Bank
98
6.7
2.5
6
Independent Bank
85
4.7
1.7
7
Middlesex
31
3.5
1.3
8
People's United
56
3.2
1.2
9
Boston Private
11
2.9
1.1
10
Brookline
29
2.4
0.9
Branches
$BN
%
1
People's United
42
2.6
22.4
2
TD Bank
34
2.6
22.0
3
Merchants
33
1.2
10.6
4
RBS
21
0.9
7.3
5
KeyCorp
13
0.8
6.7
6
Northfield
13
0.5
4.3
7
Community
14
0.4
3.7
8
Union
13
0.4
3.4
9
Berkshire Hills
7
0.3
2.9
10
Passumpsic
7
0.3
2.8
Branches
$BN
%
1
JPM Chase
802
392.9
37.1
2
Citi
269
69.6
6.6
3
B of A
352
60.1
5.7
4
HSBC
162
57.0
5.4
5
Capital One
274
38.8
3.7
6
M&T
298
33.3
3.1
7
TD Bank
228
22.4
2.1
8
KeyCorp
260
18.2
1.7
9
Wells Fargo
86
17.9
1.7
10
First Niagara
209
16.1
1.5
35
People's United
98
2.5
0.2
Branches
$BN
%
1
RBS
80
6.8
24.4
2
TD Bank
72
5.4
19.3
3
B of A
28
4.8
17.4
4
People's United
29
1.4
4.9
5
NH Mutual
18
1.0
3.7
6
BNH
23
0.9
3.2
7
Santander
20
0.8
2.9
8
NH Thrift
20
0.8
2.8
9
Northway
18
0.7
2.4
10
Centrix
6
0.7
2.3
Branches
$BN
%
1
TD Bank
56
14.4
43.3
2
KeyCorp
59
2.6
7.9
3
Bangor Bancorp
60
2.0
6.1
4
Camden National
44
1.8
5.3
5
B of A
19
1.4
4.1
6
First Bancorp
16
1.0
3.1
7
Machias
14
0.8
2.4
8
People's United
28
0.8
2.4
9
Bar Harbor
16
0.8
2.3
10
Norway
22
0.7
2.2
8
Leading market position in the best commercial banking market in the US
#1 in Fairfield County, CT, 65 branches, $6.1BN, 18.4% market share
|
 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 (%): 6.1
$100K+ Households (%): 33.8
Hartford, CT
Population: 1.2MM
Median HH Income: $63,997
Businesses: 52,315
Population Density (#/sq miles): 803
Unemployment Rate (%): 8.1
$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 (%): 7.5
$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 (%): 8.4
$100K+ Households (%): 28.1
Burlington, VT
Population: 215,000
Median HH Income: $55,875
Businesses: 10,846
Population Density (#/sq miles): 171
Unemployment Rate (%): 3.5
$100K+ Households (%): 21.9
Notes: The current national unemployment rate is 7.6%
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
9 |
 Strong Market Demographic
Profile Source: SNL Financial, US Census data for 2012
Weighted Average Median Household Income
10
$67,752
$55,252
$50,157
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
PBCT
Peer Median
US |
 Total Deposits
($MM) 6,053
2,926
2,479
2,063
1,970
1,241
Market Total Deposits ($MM)
33,037
117,693
555,811
25,438
17,069
4,499
Branch Count
65
51
92
45
34
12
18.3
2.5
0.5
8.1
11.5
27.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Bridgeport-
Stamford, CT
Boston, MA
NYC-Northern
NJ-LI
Hartford, CT
New Haven,
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
* Excludes deposits from trust institutions and branches with over $750MM deposits
** Excludes six New York branches located outside the NYC MSA
**
**
Large New Markets
11 |
 12
Southern New York Branch Update
One Year Performance Review
Deposits as of 6/30/13 totaled $591 million, up $269 million or 84% since close
Branches provide significant support to our commercial and retail banking efforts
Strengthened brand awareness in the New York market is also accelerating the
expansion of fee income businesses
“Break-even”
Originally
Forecast to
Occur at
6/30/14
The acquired Southern New York branches have surpassed expectations
Acquired NY In-store
Branches at 6/25/12
Acquired NY In-store
Branches at 6/30/13
PBCT CT In-store
Branches at 6/30/13
Note: Represents an activity-based approach versus a branch of origination approach as reported
by the FDIC $4
$9
$44
$0
$10
$20
$30
$40
$50
Average Deposits Per Branch ($MM) |
 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
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Consumer
Checking Accounts
Opened
Savings Accounts
Opened
Business Checking
Accounts Opened
Home Equity Loan
Originations
Mortgage Loan
Originations
Business Banking
Loan Originations
Investment Sales
In-store Branches
Traditional Branches
59%
57%
45%
32%
34%
28%
32%
41%
43%
55%
68%
66%
72%
68%
Connecticut In-store Versus Traditional Branch Business (Last Twelve Months Through 6/30/13)
|
 Income Statement Improvements |
 15
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
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 = 1.67%
Top 50 Median = 1.12%
-1.34%
0.58%
1.03%
1.90%
0.75%
1.38%
1.31%
1.69%
-0.48%
1.22%
0.75%
1.04%
1.52%
0.21%
0.57%
2.20%
3.38%
1.82%
3.18%
-2%
-1%
0%
1%
2%
3%
4%
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
Top 50 Median
PBCT
13.86%
2
3
1 |
 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
Boston Total New York 1Q 2013 loan originations run-rate ~$2.1BN
represents a +492% CAGR since 1Q 2010
•
Increased New York relationship managers to 14 from zero since 1Q 2010
•
Significant branch expansion in New York with 98 branches up from 5 in 1Q 2010; 58
branches, or 59%, are in- store locations
Total Massachusetts 1Q 2013 loan originations run-rate ~$650MM represents a
+36% CAGR since 1Q 2010
•
Increased Massachusetts relationship managers to 31 from 14 since 2010
•
Solid branch foundation in Massachusetts with 56 branches up from 19 in 1Q
2010 •
Currently 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) 16 |
 Revenue Opportunities
Under-represented asset classes ramping up
Asset-based lending: focused on in-footprint companies with sales of
$15MM-$250MM; credit needs range from $5MM-$35MM; $600BN market,
70% of which is located in the Northeast Mortgage Warehouse lending:
estimated market size is over $28BN in outstandings New York Commercial Real
Estate: hiring talent in the New York metro area, which is a $30BN annual
market with a population of 19.0MM, 6.9MM housing units and 3.4MM rental units
Private Banking: hired senior executive from mega-cap bank with ~20 years
managing private banking in the Northeast with initial focus on CT, metro
New York and metro Boston Enhancing wealth management offering
Proprietary asset allocation and risk management strategies are implemented with a
suite of external managers who represent our "best in class"
recommendations •
Proprietary
asset
allocation
allows
us
to
“rent”
intellectual
capital
–
no
customer
funds
leave
the
bank
Hired executive as Senior Vice President and Chief Investment Officer
Increasing momentum in other fee income businesses with a focus on
cross-sell Commercial
insurance:
revamped
systems
and
combined
all
agencies
into
a
single
entity;
focused
on
our deep commercial customer base as well as the education sector
Hired executive to lead cash management business
Growing merchant and payroll services
17 |
 18
Loans
Deposits
Growing Future Earnings Per Share
Loans and Deposits per Share
$72.93
$40
$45
$50
$55
$60
$65
$70
$75
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
Gross Loans ($BN)
Loans per Share
$70.11
$40
$45
$50
$55
$60
$65
$70
$75
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
Deposits ($BN)
Deposits per Share |
 Efficiency Ratio
Peer Group Comparison, Last Twelve Months Ending 2Q 2013
Low cost producers tend to yield the best returns to shareholders.
Efficiency
progress
requires
both
revenue
growth
AND
expense
discipline
Median, excluding PBCT = 61.5%
Source: SNL Financial
80
70
60
50
40
30
20
10
0
62.8
PBCT
19 |
 20
EMOC has been fully operational since November 2011
Three person committee comprised of the CFO, Chief Administrative Officer and
Chief HR Officer EMOC oversees PBCT’s noninterest expense management,
implements strategies to ensure attainment of expense management targets and
oversees revenue initiatives that require expenditures
Provides a horizontal view of the organization
Expense Management Units (EMUs) established to facilitate EMOC functions
Defined EMUs include:
•
Technology
•
Operations
•
Real Estate Services
Spending requests above $25,000 are submitted by EMU owners for approval
Staffing models, staffing replacements and additions for mid-level positions and
above require approval by the Committee
Introduction to EMOC
Expense Management Oversight Committee (EMOC)
•
Employment/Benefits
•
Marketing
•
Regulatory/Institutional
•
Depreciation/Equipment
•
Decentralized
•
Intangible Amortization |
 Expense Progress
Estimated Cost Savings Analysis
Our 2Q 2013 operating expense base of $205MM reflects $28MM ($112MM annualized)
savings from successfully-executed expense initiatives
205
233
200
210
220
230
240
250
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
Operating Noninterest Expense ($MM)
Pro Forma / Actual
Without Expense Initiatives
.
$28MM
Cost
Savings
21
Source: SNL Financial
Note: “Pro Forma / Actual” represents PBCT operating noninterest expense and the actual
expenses at the acquired institutions. Acquisition target costs fall away as the acquisitions
are completed. “Without Expense Initiatives” represents PBCT operating noninterest
expense and the actual expenses at the acquired institutions in 4Q09, and then applies
the peer median expense growth rate in each subsequent quarter |
 Expense Progress
Estimated Cost Savings Analysis
The $28MM in quarterly cost reductions is attributable to efforts related to
acquisition cost savings and other initiatives
22
Source: SNL Financial
Note: “Pro Forma / Actual” represents PBCT operating noninterest expense and the actual
expenses at the acquired institutions. Acquisition target costs fall away as the acquisitions
are completed. “Without Expense Initiatives” represents PBCT operating noninterest
expense and the actual expenses at the acquired institutions in 4Q09, and then applies
the peer median expense growth rate in each subsequent quarter 233
205
7
21
$0
$50
$100
$150
$200
$250
Without Expense
Initiatives
Announced Acquisition
Savings
Other Initiatives
Pro Forma / Actual
Operating Noninterest Expense ($MM) |
 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
0.26
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
PBCT |
 P/TBV
vs. ROATE Peer Group Regression Analysis
Improved profitability, enhanced predictability of earnings and transparent capital
allocation will create additional shareholder value
PBCT
Source: SNL Financial
Note: Analysis utilizes Bloomberg 3 Year Adjusted Betas, as of July 25, 2013
R²
= 0.75
0
50
100
150
200
250
300
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2014E Return on Average Tangible Equity Less Cost of Equity
24 |
 Interest Rate Risk Profile |
 26
Net Interest Income (NII) Sensitivity
Interest Rate Risk Profile
1
-0.7%
4.5%
11.3%
16.4%
21.5%
-0.9%
4.9%
11.0%
17.0%
22.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Dn25
Up100
Up200
Up300
Up400
Immediate Parallel Shock
6/30/13
3/31/13
1.9%
0.7%
0.0%
2.7%
1.3%
-1.5%
-2.9%
1.4%
0.4%
0.1%
3.6%
1.9%
-1.8%
-3.3%
-4.0%
-2.0%
0.0%
2.0%
4.0%
Short End +100
Short End +50
Short End -25
Long End +100
Long End +50
Long End -50
Long End -100
Yield Curve Twist
6/30/13
3/31/13
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 |
 27
For 1Q 2013 we were twice as asset sensitive as the estimated median of our peer
group Notes:
1.
Analysis is as of 03/31/13 filings
2.
Data as of 03/31/13 SEC filings; where exact +100bps shock up scenario data was
not provided, PBCT interpolated based on data disclosed 3.
Data as of 03/31/13 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
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
-2.5%
7.9%
2.7%
1.8x
Shock Up
200bps
-4.0%
15.8%
5.2%
2.1x
1
2
3 |
 Summary |
 29
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 |
 Operating Net Interest Margin
Linked Quarter Change
(%)
3.38%
3.33%
(0.05%)
(0.01%)
(0.01%)
0.02%
1Q 2013
New Loan
Volume
Loan Repricing /
Amort
Increased
Borrowings
Calendar
Days
2Q 2013
31 |
 Loans
Linked Quarter Change
(in $ millions)
22,161
22,866
32
Annualized Linked QTD change
12.7%
22,161
746
160
(201)
22,866
Mar 31, 2013
Commercial Banking
Retail
Acquired
Jun 30, 2013 |
 2Q13
Total Loan Portfolio $22.9 BN
Loans by Business Line
CRE
$7.6
33%
C&I
$5.4
24%
Residential
Mortgage
$4.1
18%
Home Equity &
Other
$2.1
9%
PCLC
$1.6
7%
Business Banking
$1.1
5%
PUEFC
$0.8
4%
33 |
 34
Loans by Geography
Excluding
equipment
finance loans,
~95% of our
2Q13 loan
portfolio is within
the Northeast
2Q13 Total Loan Portfolio
$22.9 BN
Connecticut
$6.8
29%
Massachusetts
$4.1
18%
New York
$3.5
15%
Vermont
$1.7
8%
New Hampshire
$1.3
6%
Maine
$0.9
4%
New Jersey
$0.7
3%
Pennsylvania
$0.2
1%
Maryland
$0.2
1%
Other
$3.4
15%
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. |
 35
Acquired Loan Portfolio
(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 $6.7MM of charge-offs applied against reserves
established subsequent to acquisition. As of 6/30/13
(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)
$884.7
$273.7
$14.2
$42.1
34%
$22.7
Smithtown (11/30/10)
645.5
325.4
104.4
74.7
140%
126.9
Others (various dates)
351.4
85.3
23.7
42.2
56%
29.6
Total
$1,881.6
$684.4
$142.3
$159.0
c
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 Acquired loans initially recorded at fair value (inclusive of
related credit mark) without carryover of historical ALLL
Accounting model is cash-flow based: |
 36
Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
$ in millions, except per share
data Impact on Net Interest Margin
Impact on Earnings Per Share
2Q13 Total Accretion (All interest income on acquired loans)
34
Interest Income from Amortization of Original Discount on Acq. Loan Portfolio
9.2
1Q13 Acquired Loan Portfolio Carrying Amount
2,083
2Q13 Effective Tax Rate
32.5%
2Q13 Acquired Loan Portfolio Carrying Amount
1,882
2Q13 Average Acquired Loan Portfolio
1,982
2Q13 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
6.2
Effective Yield on Acquired Loan Portfolio
6.86%
2Q13 Weighted Average Shares Outstanding
313.5
5.01%
2Q13 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.02
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.85%
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
9.2
2Q13 Average Earning Assets
27,079
Add: Average unamortized loan discount
2
42
Adjusted 2Q13 Average Earning Assets
27,121
Impact on Overall Net Interest Margin (bps)
14
Operating Net Interest Margin
3.33%
Adjusted Net Interest Margin
3.19%
Amortization of Original Discount on Acquired Loan Portfolio
Amortization of Original Discount on Acquired Loan Portfolio
Note:
1.
Excluding FinFed, the weighted average coupon on the acquired loan portfolio is 4.76% 2.
Represents the difference between the outstanding balance of the acquired loan portfolio and the
carrying amount of the acquired loan portfolio Weighted Average Coupon on Acquired Loan Portfolio 1
|
 37
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
Total
$13.8
$14.3
($14.9)
$13.2
Since 2010, we have acquired $5.4BN of loans, approximately 35% 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 +$13.2MM |
 38
Deposits
Linked Quarter Change
(in $ millions)
Total
21,792
21,982
Commercial
Retail
Annualized Linked QTD change
3.5%
16,178
16,196
5,614
5,786
172
18
Mar 31, 2013
Retail
Commercial
Jun 30, 2013 |
 39
Non-Interest Income
Linked Quarter Change
(in $ millions)
82.9
86.1
5.8
2.0
1.1
(1.5)
(1.2)
0.2
(3.2)
1Q 2013
Gain on Acq
Loan Sales
Bank Service
Charges
Customer
Derivative
Income
Loan
Prepayment
Fees
Gain on Resi
Mtg Loan
Sales
Insurance
Other
2Q 2013 |
 40
Total
Non-Operating
Operating
Non-Interest Expense
Linked Quarter Change
(in $ millions)
212.0
205.8
204.0
(7.6)
(2.8)
(1.0)
2.0
1.9
1.2
0.1
205.4
8.0
0.4
1Q 2013
Non-
Operating
Comp &
Bene
Occ &
Equip
REO
Adv &
Pro
Prof &
Outside
Other
2Q 2013 |
 41
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%
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 |
 42
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
1.33
1.42
1.89
2.42
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
PBCT
Peer Group Median
Top 50 Banks by Assets |
 43
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings
*
Excluding acquired loan charge-offs, PBCT’s charge-off ratio was 0.18% in both 2Q 2013
and 1Q 2013 Since 1Q 2010
0.00
0.50
1.00
1.50
2.00
PBCT
Peer Group Median
Top 50 Banks
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
0.24
0.19
0.29
0.38
*
* |
 44
Operating ROAA Progress
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%
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 |
 45
Operating ROATE Progress
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%
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 |
 46
Operating Dividend Payout Ratio
Since 1Q 2010
180%
209%
157%
104%
98%
87%
96%
93%
82%
84%
85%
91%
83%
175%
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 |
 47
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
over 40% of our current market capitalization
Line Item
PBCT
Peer
Median
PBCT Vs.
Peers
5-Year Loans Per Share CAGR
11.0%
-1.3%
+12.3%
5-Year Deposits Per Share CAGR
9.8%
2.5%
+7.3%
Notes:
5-Year CAGR figures based on 2Q 2008 to 2Q 2013 data
|
 48
Capital Ratios
Since 1Q 2010
1Q 2010
1Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 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%
Leverage Ratio
1, 5
19.2%
14.5%
12.1%
11.8%
11.5%
10.6%
10.0%
9.3%
Tier 1 Common
23.1%
17.1%
13.9%
13.6%
13.6%
12.7%
12.0%
10.8%
Tier 1 Risk-Based Capital
3, 5
23.9%
17.9%
14.4%
14.1%
14.1%
13.2%
12.5%
11.6%
Total Risk-Based Capital
4, 5
25.6%
19.4%
16.0%
15.6%
15.6%
14.7%
13.7%
12.8%
People’s United Bank
Leverage Ratio
1, 5
12.3%
11.4%
11.0%
10.9%
10.8%
9.8%
9.7%
9.5%
Tier 1 Risk-Based Capital
3, 5
15.4%
13.9%
13.1%
13.0%
13.2%
12.2%
12.1%
11.9%
Total Risk-Based Capital
4,5
16.3%
14.8%
14.0%
14.0%
14.1%
13.1%
13.5%
13.2%
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 total stockholder’s equity, excluding goodwill
and other acquisition-related intangibles, 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 for the Bank are: Leverage Ratio, 5%; Tier 1 Risk-Based Capital,
6%; and Total Risk-Based Capital, 10% 2 |
 Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
Commercial ALLL -
$159.3 million
96% of Commercial NPLs
Retail ALLL -
$18.2 million
23% of Retail NPLs
Total ALLL -
$177.5 million
72% of Total NPLs
0.00%
0.50%
1.00%
1.50%
2.00%
1.10%
1.05%
NPLs:Loans
ALLL:Loans
Commercial
Banking
49
0.00%
0.50%
1.00%
1.50%
2.00%
1.38%
0.31%
Retail Banking
NPLs:Loans
ALLL:Loans
0.00%
0.50%
1.00%
1.50%
2.00%
1.18%
0.85%
NPLs:Loans
ALLL:Loans
Total |
 50
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 |
 51
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 |
 52
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). 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. |
 53
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
|
 54
Non-GAAP Financial Measures and Reconciliation to GAAP
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: Peter Goulding, CFA
203-338-6799
peter.goulding@peoples.com |