Attached files
| file | filename |
|---|---|
| 8-K - 8-K - People's United Financial, Inc. | d662346d8k.htm |
| EX-99.1 - EX-99.1 - People's United Financial, Inc. | d662346dex991.htm |
 EXHIBIT 99.2
Investor Presentation dated January 16, 2014 |
 4
th
Quarter
2013
Earnings
Conference
Call
January 16, 2014 |
 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) 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.
|
 2
Loans grew $2.7 billion, or 12%, to $24.4 billion
Deposits increased $0.8 billion, or 4%, to $22.6 billion
Net interest income decreased $40 million, or 4%, to $889 million
Net interest margin declined 55 basis points to 3.31%
Fee income increased $19 million, or 6%, to $333 million
Operating
expenses
held
relatively
flat
at
$826
million
vs.
$818
million
in
2012
Asset quality remained strong
NPAs as a percentage of originated loans, REO and repossessed assets improved to
1.08% from 1.48% in 2012
NCOs to average loans remained low at 19 basis points
Solid capital levels
Tier 1 Common ratio at 10.2%
Tangible common equity to tangible assets ratio at 7.8%
2013 Results
Overview / 2013 vs. 2012 |
 3
2013 Guidance
Operating Performance Review
Guidance Range
Actual
Loan Growth
“Grow at high single digits –
mid teens”
12%
Deposit Growth
“Grow at mid-single digits”
4%
Net Interest Margin
3.30 –
3.40%
3.31%
Net Interest Income
$900 –
$940MM
$889MM
Non-Interest Income
“Grow at mid-single digits”
6%
Non-Interest Expense
$815 –
$825MM
$826MM
Asset Quality
“Excellent credit quality”
Orig. Non-Perf. Assets, 1.08%;
Net Charge-Offs, 0.19%
Capital Levels
“Strong capital levels”
Tier 1 Common, 10.2%; TCE/TA, 7.8% |
 4
Net Interest Income
Linked Annual Change
(in $ millions)
929
(80)
(19)
37
12
10
889
2012
Acquired
Loans
Borrowing
Costs
Originated
Loans
Investments
Deposits
2013 |
 5
Total
Non-Operating
Operating
Non-Interest Expense
Linked Annual Change
(in $ millions)
830.6
839.0
817.9
826.3
12.7
12.7
(1.7)
(4.3)
17.0
3.5
(1.9)
(4.2)
2012
Operating
Expense -
S. NY
Branches (1)
Compliance (2)
Improved Use of
Technology
Comp. &
Benefits (3)
Net Branch
Consolidations/
Openings (4)
Other
2013
(3)
Excludes
the
impact
of
the
Operating
Expense
–
S.
NY
branches,
Net
Branch
Consolidations
/
Openings and Compliance categories
(4)
Excludes consolidations and openings in southern New York
(2)
Reflects direct costs of incremental Compliance related personnel and system
investments (1) Includes the Park Avenue branch opened in December
2012 |
 6
2014 Goals
Grow loans in the high-single digits to mid-teens
Increase deposits in the mid-teens
Including $2 billion of brokered deposits
Net interest income target range of $930 to $960 million
Implies net interest income growth of 5-8%
Expect net interest margin in the 3.10-3.20% range
Maintain fee income levels despite weaker mortgage banking and prepayment fees
Wealth management revenue is expected to grow 10% to $56 million
Insurance and cash management revenues are expected to grow 10% to $34 million, and
13% to $23 million, respectively
Full year operating expense target range of $830 to $840 million
Maintain a fortress balance sheet with continued excellent credit quality and strong
capital levels
Gains
on
sales
of
residential
mortgages
are
expected
to
fall
45% to $8 million; Commercial
banking fees are expected to fall 24% or $7 million |
 7
Fourth Quarter 2013 Results
Overview / 4Q 2013 vs. 3Q 2013
Operating earnings of $60.0 million or $0.20 per share, versus $0.20 per share
in the prior quarter
Net interest margin of 3.24%, down 6 basis points
Loan growth of $1,163 million, 20% annualized growth rate
Deposit growth of $367 million, 7% annualized growth rate
Non-interest income decreased $3.8 million to $80.2 million
Efficiency ratio was 64.3% compared to 63.6% last quarter
Net charge-offs were 18 basis points in line with 17 basis points last
quarter Completed the share repurchase program
Repurchased 8.9 million shares, or $131 million, at a weighted average price of
$14.72 per share |
 8
Net Interest Income
Linked Quarter Change
(in $ millions)
223.5
(3.1)
(0.2)
3.4
0.9
0.4
224.9
3Q 2013
Acquired
Loans
Borrowing
Costs
Originated
Loans
Investments
Deposits
4Q 2013 |
 9
Net Interest Margin (%)
Linked Quarter Change
3.30%
3.24%
(0.04%)
(0.04%)
0.01%
0.01%
3Q 2013
Acquired
Loans
Originated Loan
Volume / Mix
Investments
Deposit
Rates / Mix
4Q 2013 |
 10
Loans
Linked Quarter Change
(in $ millions)
Annualized Linked QTD change
20.0%
23,227
217
(137)
24,390
Sep 30, 2013
Commercial
Retail
Acquired
Dec 31, 2013
1,083 |
 11
Deposits
Linked Quarter Change
(in $ millions)
Total
22,190
22,557
Retail
Annualized Linked QTD change
6.6%
Commercial
15,897
16,195
6,293
6,362
69
298
Sep 30, 2013
Retail
Commercial
Dec 31, 2013 |
 12
Non-Interest Income
Linked Quarter Change
(in $ millions)
84.0
80.2
0.7
0.7
0.4
(2.9)
(2.4)
(1.5)
0.4
0.8
3Q 2013
Customer
Interest Rate
Swaps
Operating
Leases
Investment
Management
Fees
Brokerage
Commissions
Gain on Resi
Mtg Loan
Sales
Insurance
Bank Service
Charges
Other
4Q 2013 |
 13
Total
Non-Operating
Operating
Non-Interest Expense
Linked Quarter Change
(in $ millions)
212.5
208.7
209.2
(2.3)
(2.4)
(1.0)
1.0
0.6
0.3
207.7
3.3
1.0
3Q 2013
Non-
Operating
REO
Adv. &
Promotion
Comp. &
Benefits
Operating
Leases
Other
4Q 2013 |
 14
Efficiency Ratio (%)
Last Five Quarters
63.0%
64.1%
62.7%
63.6%
64.3%
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013 |
 15
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
1.08
1.61
2.17
1.00
1.50
2.00
2.50
3.00
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
PBCT
Peer Group Median
Top 50 Banks by Assets
Last Five Quarters |
 16
Asset Quality
Net Charge-Offs / Avg. Loans (%)
Source: SNL Financial and Company filings
*
Excluding
acquired
loan
charge-offs,
PBCT’s
charge-off
ratio
was
0.17%,
0.16%,
0.18%
and
0.18%
in
4Q
2013,
3Q
2013,
2Q
2013 and
1Q 2013, respectively
*
*
*
*
0.18
0.25
0.31
0.00
0.20
0.40
0.60
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
PBCT
Peer Group Median
Top 50 Banks
Last Five Quarters |
 17
Growing Future Earnings Per Share
Last Five Quarters
$80.72
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$15
$16
$17
$18
$19
$20
$21
$22
$23
$24
$25
4Q12
1Q13
2Q13
3Q13
4Q13
Gross Loans ($BN)
Deposits ($BN)
Deposits per Share
Loans per Share
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$15
$16
$17
$18
$19
$20
$21
$22
$23
$24
$25
4Q12
1Q13
2Q13
3Q13
4Q13
Loans
Deposits
$74.65 |
 18
Operating ROAA (%)
Last Five Quarters
0.87%
0.77%
0.81%
0.78%
0.75%
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013 |
 19
Operating ROATE (%)
Last Five Quarters
8.6%
8.1%
9.3%
9.8%
9.8%
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013 |
 20
Capital Ratios
Last Five Quarters
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
People’s United Financial
Tang. Com. Equity/Tang. Assets
10.2%
9.6%
8.7%
8.5%
7.8%
Leverage Ratio
1, 5
10.6%
10.0%
9.3%
9.2%
8.3%
Tier 1 Common
13.1%
12.4%
11.6%
11.4%
10.2%
Tier 1 Risk-Based Capital
3, 5
13.2%
12.5%
11.6%
11.4%
10.2%
Total Risk-Based Capital
4, 5
14.7%
13.7%
12.8%
12.6%
11.3%
People’s United Bank
Leverage Ratio
1, 5
9.8%
9.7%
9.5%
9.5%
9.0%
Tier 1 Risk-Based Capital
3, 5
12.2%
12.1%
11.9%
11.8%
11.1%
Total Risk-Based Capital
4,5
13.1%
13.5%
13.2%
13.2%
12.3%
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 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 for the Bank are: Leverage Ratio, 5%; Tier 1 Risk-Based Capital, 6%; and
Total Risk-Based Capital, 10% |
 21
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 |
 23
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
-0.4%
0.7%
2.7%
-3.7%
2.3%
4.7%
-0.3%
2.3%
5.8%
-3.2%
2.6%
5.7%
-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
12/31/13
9/30/13
-1.2%
3.1%
7.3%
10.7%
14.1%
-1.0%
4.7%
11.1%
16.0%
20.9%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Dn25
Up100
Up200
Up300
Up400
Immediate Parallel Shock
12/31/13
9/30/13 |
 24
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 12/31/13
(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)
$753.2
$253.8
$13.9
$32.5
43%
$23.0
Smithtown (11/30/10)
496.2
305.0
100.1
83.1
120%
128.1
Others (various dates)
275.7
80.9
23.0
26.9
86%
30.5
Total
$1,525.1
$639.7
$137.0
$142.5
(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 $7.2MM of charge-offs applied against reserves
established subsequent to acquisition. c |
 25
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
4Q13 Total Accretion (All interest income on acquired loans)
26
Interest Income from Amortization of Original Discount on Acq. Loan
Portfolio 7.7
3Q13 Acquired Loan Portfolio Carrying Amount
1,662
4Q13 Effective Tax Rate
31.4%
4Q13 Acquired Loan Portfolio Carrying Amount
1,525
4Q13 Average Acquired Loan Portfolio
1,594
4Q13 Earnings from Amortiz. of Original Discount on Acq. Loan Portfolio
5.3
Effective Yield on Acquired Loan Portfolio
6.60%
4Q13 Weighted Average Shares Outstanding
302.2
Weighted Average Coupon on Acquired Loan Portfolio
1
4.67%
4Q13 EPS Impact from Amortiz. of Discount on Acq. Loan Portfolio
$0.02
Incremental Yield Attributable to Amortiz. of Discount on Acq. Loan Portfolio
1.93%
Incremental Interest Income from Amortiz. of Discount on Acq. Loan Portfolio
7.7
4Q13 Average Earning Assets
28,294
Add: Average unamortized loan discount
2
26
Adjusted 4Q13 Average Earning Assets
28,320
Impact on Overall Net Interest Margin (bps)
11
Operating Net Interest Margin
3.24%
Adjusted Net Interest Margin
3.13%
Amortization of Original Discount on 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 4.44% 2.
Represents the difference between the outstanding balance of the acquired loan portfolio and the
carrying amount of the acquired loan portfolio
|
 26
Allowance for Loan Losses
Originated Portfolio Coverage Detail
(in $ millions)
Commercial ALLL -
$158.5 million
115% of Commercial NPLs
Retail ALLL -
$19.0 million
24% of Retail NPLs
Total ALLL -
$177.5 million
82% of Total NPLs
0.95%
0.78%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Total
1.26%
0.30%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Retail Banking
0.83%
0.95%
0.00%
0.50%
1.00%
1.50%
NPLs:Loans
ALLL:Loans
Commercial
Banking |
 27
Operating Dividend Payout Ratio (%)
Last Five Quarters
85%
91%
83%
83%
83%
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013 |
 28
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 |