People's United Financial, Inc. (Nasdaq: PBCT) has announced net income of $32.0 million, or $0.09 per share, for the fourth quarter of 2010, compared to $24.1 million, or $0.07 per share, for the third quarter of 2010, and $24.9 million, or $0.07 per share, for the fourth quarter of 2009. Included in each of these quarter's results are pre-tax merger-related expenses and core system conversion costs totaling $7.0 million, $5.3 million and $4.5 million, respectively. Excluding the effect of these items, net income would have been $36.7 million, or $0.10 per share, for the fourth quarter of 2010, $27.7 million, or $0.08 per share for the third quarter of 2010 and $28.0 million, or$0.08 per share, for the fourth quarter of 2009.
For the year ended December 31, 2010, net income totaled $85.7 million, or $0.24 per share, compared to$101.2 million, or $0.30 per share, for 2009. Included in both the 2010 and 2009 results are pre-tax merger-related expenses, core system conversion costs and one-time charges totaling $58.9 million and$4.5 million, respectively. Excluding the effect of these items, net income would have been $125.4 million, or $0.35 per share, for 2010 and $104.3 million, or $0.31 per share, for 2009.
As previously reported, People's United Financial completed its acquisitions of Smithtown Bancorp, Inc. and LSB Corporation on November 30, 2010. Accordingly, Smithtown's and LSB's results of operations are included as of the acquisition date, and prior period results have not been restated to include Smithtown and LSB.
People's United Financial announced today a definitive agreement to acquire Danvers Bancorp, Inc. based in Danvers, Massachusetts. Further information regarding this acquisition is included in a separate release.
People's United Financial's Board of Directors has authorized an additional repurchase of common stock. Up to 5 percent of People's United Financial's then-outstanding common stock, or up to 17.5 million shares, can be repurchased, either directly or through agents, in the open market at prices and terms satisfactory to management. Under the stock repurchase authorization announced in April 2008, 14.3 million shares out of a maximum of 17.3 million shares authorized for repurchase, at a total cost of $191.2 million, had been repurchased as of December 31, 2010.
The Board of Directors of People's United Financial declared a $0.1550 per share quarterly dividend, payable February 15, 2011 to shareholders of record on February 1, 2011. Based on the closing stock price on January 19, 2011, the dividend yield on People's United Financial common stock is 4.4 percent.
"Our announcement today of the acquisition of Danvers Bancorp furthers our strategy of acquiring financial institutions in attractive markets and continues to build on what was an exciting and transformational 2010 for the bank," stated Jack Barnes, President and Chief Executive Officer. "The successful completion of our core system conversion and the rebranding of our branches throughout New England to People's United Bank, in addition to closing four acquisitions during 2010, position us well for future growth."
Barnes added, "Our performance throughout 2010 continues to reflect the benefits from our focused commercial, wealth management and retail banking strategy. Excluding acquired loans, our commercial banking portfolio increased 7 percent on an annualized basis this quarter, while our residential mortgage portfolio increased 14 percent, and we continue to strengthen our position in the critical Boston and New York markets."
Barnes concluded, "We operate from a position of competitive strength characterized by our strong business fundamentals, ability to further leverage our brand in attractive markets and our prospects for organic growth. Furthermore, we have demonstrated our ability to prudently and effectively deploy capital through acquisitions, adherence to a strong dividend policy and share repurchases."
"On an operating basis earnings were $37 million or 10 cents per share this quarter," said Paul D. Burner, Senior Executive Vice President and Chief Financial Officer. "Significant drivers of the company's performance in the fourth quarter were an improvement in the net interest margin and lower net loan charge-offs. The net interest margin improved 12 basis points to 3.85 percent, primarily reflecting a reduction in our cost of deposits and the partial benefit from our two acquisitions completed during the fourth quarter."
Commenting on asset quality, Burner stated, "Our non-performing loans declined on a sequential quarter basis for the first time since September 2009, an indication of what we believe is stabilization across the loan portfolio. In addition, net loan charge-offs this quarter were the lowest since the first quarter of 2010."
Loans acquired in connection with acquisitions have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio's historical allowance for loan losses. As such, selected asset quality metrics have been highlighted to distinguish between the 'originated' portfolio and the 'acquired' portfolios. For the originated loan portfolio, representing all loans other than those acquired, non-performing loans totaled $245.2 million at December 31, 2010, and the ratio of originated non-performing loans to originated loans was 1.68 percent, compared to $251.4 millionand 1.77 percent, respectively, at September 30, 2010. Non-performing loans in the acquired loan portfolios, which represent those loans acquired that meet our definition of non-performing but for which the risk of loss has already been considered by virtue of our estimate of acquisition-date fair value and/or the existence of an FDIC loss-share agreement, totaled $359.8 million at December 31, 2010.
Non-performing assets totaled $303.1 million at December 31, 2010, down from $312.0 million atSeptember 30, 2010. Non-performing assets equaled 2.07 percent of originated loans, REO and repossessed assets at December 31, 2010 compared to 2.18 percent at September 30, 2010. AtDecember 31, 2010, the allowance for loan losses as a percentage of originated loans was 1.18 percent and as a percentage of originated non-performing loans was 70 percent, compared to 1.21 percent and 69 percent, respectively, at September 30, 2010.
Fourth quarter net loan charge-offs totaled $10.9 million compared to $21.8 million in the third quarter of 2010. Net loan charge-offs as a percent of average loans on an annualized basis were 0.28 percent in the fourth quarter of 2010 compared to 0.57 percent in this year's third quarter. The level of the allowance for loan losses is unchanged from September 30, 2010.
In the fourth quarter of 2010, return on average tangible assets was 0.61 percent and return on average tangible stockholders' equity was 3.7 percent, compared to 0.48 percent and 2.7 percent, respectively, for the third quarter of 2010. At December 31, 2010, People's United Financial's tangible equity ratio stood at 14.1 percent.
Conference Call
On January 21, 2011, at 11 a.m., Eastern Time, People's United Financial will host a conference call to discuss this earnings announcement and our acquisition announcement. The call may be heard throughwww.peoples.com by selecting "Investor Relations" in the "About Us" section on the home page, and then selecting "Conference Calls" in the "News and Events" section. Additional materials relating to the call may also be accessed at People's United Bank's web site. The call will be archived on the web site and available for approximately 90 days.
4Q 2010 Financial Highlights
Summary
Net income totaled $32.0 million, or $0.09 per share.
Operating earnings were $36.7 million, or $0.10 per share.
Net interest income totaled $189.8 million.
Net interest margin increased 12 basis points from 3Q10 to 3.85%.
The interest cost on deposits declined 6 basis points from 3Q10.
Provision for loan losses totaled $10.9 million.
Net loan charge-offs totaled $10.9 million in 4Q10.
Non-interest income totaled $75.9 million in both 4Q10 and 3Q10.
Non-interest expense totaled $206.9 million in 4Q10 compared to $194.2 million in 3Q10.
4Q10 and 3Q10 include a total of $7.0 million and $5.3 million, respectively, of merger-related expenses and core system conversion costs.
Effective income tax rate was 33.2% in 4Q10 and 32.5% in 2010.
Excluding a $1.2 million non-taxable BOLI death benefit recorded in 2Q10, the income tax rate was 32.8% in 2010.
Commercial Banking
Average commercial banking loans increased $580 million from 3Q10 to $11.1 billion.
Excluding acquired loans, commercial banking loans increased $175 million fromSeptember 30, 2010.
Non-performing commercial banking assets, excluding acquired non-performing loans, totaled$193.1 million at December 31, 2010, a $12.0 million decrease from September 30, 2010.
The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 1.57% at December 31, 2010 compared to 1.59% at September 30, 2010.
Net loan charge-offs totaled $7.0 million, or 0.25% annualized, of average commercial banking loans in 4Q10, compared to $18.2 million, or 0.69% annualized, in 3Q10.
Retail & Business Banking
Average residential mortgage loans totaled $2.6 billion, a $148 million increase from 3Q10.
Excluding acquired loans, residential mortgage loans increased $98 million from September 30, 2010.
Net loan charge-offs totaled $2.0 million, or 0.30% annualized, of average residential mortgage loans.
The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 3.17% at December 31, 2010 compared to 3.68% at September 30, 2010.
Average home equity loans totaled $2.0 billion, unchanged from 3Q10.
Net loan charge-offs totaled $1.1 million, or 0.23% annualized, of average home equity loans.
Wealth Management
Wealth Management income decreased $1.0 million from 3Q10.
Investment management fees and brokerage commissions increased $0.3 million and $0.1 million, respectively, while insurance revenue decreased $1.4 million (reflecting the seasonal nature of insurance renewals).
Assets managed and administered, which are not reported as assets of People's United Financial, totaled $17.1 billion at both December 31, 2010 and September 30, 2010.
People's United Financial, a diversified financial services company with $25 billion in assets, provides commercial banking, retail and business banking, and wealth management services through a network of nearly 340 branches in Connecticut, Vermont, New York, New Hampshire, Maine and Massachusetts. Through its subsidiaries, People's United Financial provides equipment financing, asset management, brokerage and financial advisory services, and insurance services.
Additional Information About the Transaction
The proposed transaction will be submitted to the stockholders of Danvers Bancorp for their consideration. In connection with the proposed merger with Danvers Bancorp, Inc., People's United Financial will file with the Securities and Exchange Commission (the ‘SEC’) a Registration Statement on Form S-4 that will include a proxy statement of Danvers Bancorp that also constitutes a prospectus of People's United Financial. Danvers Bancorp will mail the proxy statement/prospectus to its stockholders. Investors and security holders are urged to read the proxy statement/prospectus regarding the proposed merger when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain a free copy of the proxy statement/prospectus (when available) and other related documents filed by People's United Financial and Danvers Bancorp with the SEC at the SEC's website at www.sec.gov. The proxy statement/prospectus (when it is available) and the other documents may also be obtained for free by accessing People's United Financial's web site at www.peoples.comunder the tab ‘Investor Relations’ and then under the heading ‘Financial Information’ or by accessing Danvers Bancorp’s web site at www.danversbank.com under the tab ‘Investor Relations’ and then under the heading ‘SEC Filings.’
Participants in the Transactions
People's United Financial, Danvers Bancorp and their respective directors, executive officers and certain other members of management and employees may be deemed ‘participants’ in the solicitation of proxies from Danvers Bancorp's stockholders in favor of the merger with Danvers Bancorp. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Danvers Bancorp stockholders in connection with the proposed merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about the executive officers and directors of People's United Financial in its Annual Report on Form 10-K for the year ended December 31, 2009 and in its definitive proxy statement filed with the SEC on March 23, 2010. You can find information about Danvers Bancorp's executive officers and directors in its Annual Report on Form 10-K for the year ended December 31, 2009 and in its definitive proxy statement filed with the SEC on April 16, 2010.
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities.
For additional factors that may affect future results, please see filings made by People's United Financial and Danvers Bancorp with the SEC, including People's United Financial's Annual Report on Form 10-K for the year ended December 31, 2009 and Danvers Bancorp's Annual Report on Form 10-K for the year ended December 31, 2009. People's United Financial and Danvers Bancorp undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or other changes.
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" 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 acquired companies; and (11) possible changes in regulation resulting from or relating to recently enacted 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.
BRIDGEPORT, Conn., Jan. 20, 2011 /PRNewswire/ -- Access Information About People's United Financial at www.peoples.com .
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS
People's United Financial completed its acquisitions of Smithtown Bancorp, Inc. and LSB Corporation on
November 30, 2010. Accordingly, Smithtown's and LSB's results of operations are included beginning with the
acquisition date, and prior period results have not been restated to include Smithtown and LSB.
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions, except per share data)
2010
2010
2010
2010
2009
Financial Results:
Net interest income
$ 189.8
$ 175.8
$ 173.8
$ 159.6
$ 147.5
Provision for loan losses
10.9
21.8
17.8
9.5
13.6
Non-interest income
75.9
75.9
76.8
70.6
71.7
Non-interest expense (1)
206.9
194.2
209.8
200.3
172.2
Income before income tax expense
47.9
35.7
23.0
20.4
33.4
Net income (2, 4)
32.0
24.1
16.0
13.6
24.9
Selected Statistical Data:
Net interest margin (3)
3.85%
3.73%
3.68%
3.47%
3.19%
Return on average assets (3)
0.56
0.44
0.29
0.26
0.47
Return on average tangible assets (3)
0.61
0.48
0.32
0.28
0.51
Return on average stockholders' equity (3)
2.4
1.8
1.2
1.0
2.0
Return on average tangible stockholders' equity (3)
3.7
2.7
1.7
1.5
2.8
Efficiency ratio (4)
72.5
72.1
73.0
75.9
73.7
Per Common Share Data:
Diluted earnings per share
$ 0.09
$ 0.07
$ 0.04
$ 0.04
$ 0.07
Dividends paid per share
0.1550
0.1550
0.1550
0.1525
0.1525
Dividend payout ratio
172.5%
230.4%
352.0%
376.2%
204.7%
Book value (end of period)
$ 14.91
$ 15.04
$ 15.10
$ 15.12
$ 15.20
Tangible book value (end of period) (4)
9.30
10.07
10.14
10.25
10.68
Stock price:
High
14.17
14.35
16.79
17.08
17.16
Low
12.20
12.56
13.49
15.07
15.15
Close (end of period)
14.01
13.09
13.50
15.62
16.70
Common shares (end of period) (in millions) (4)
350.07
356.73
358.51
362.25
335.63
Weighted average diluted common shares (in millions)
352.53
354.99
358.24
344.82
332.56
(1) Includes a total of $7.0 million, $5.3 million, $23.2 million, $23.4 million and $4.5 million of merger-related expenses,
core system conversion costs and one-time charges for the three months ended Dec. 31, 2010, Sept. 30, 2010,
June 30, 2010, March 31, 2010 and Dec. 31, 2009, respectively.
(2) Operating earnings were $36.7 million, $27.7 million, $31.8 million, $29.2 million and $28.0 million for the three
months ended Dec. 31, 2010, Sept. 30, 2010, June 30, 2010, March 31, 2010 and Dec. 31, 2009, respectively.
(3) Annualized.
(4) See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
Twelve Months Ended
Dec. 31,
Dec. 31,
(dollars in millions, except per share data)
2010
2009
Financial Results:
Net interest income
$ 699.0
$ 576.8
Provision for loan losses
60.0
57.0
Non-interest income (1)
299.2
309.1
Non-interest expense (2)
811.2
684.6
Income before income tax expense
127.0
144.3
Net income (3,4)
85.7
101.2
Selected Statistical Data:
Net interest margin
3.69%
3.19%
Return on average assets
0.39
0.49
Return on average tangible assets
0.42
0.53
Return on average stockholders' equity
1.6
2.0
Return on average tangible stockholders' equity
2.4
2.8
Efficiency ratio (4)
73.3
73.5
Per Common Share Data:
Diluted earnings per share
$ 0.24
$ 0.30
Dividends paid per share
0.6175
0.6075
Dividend payout ratio
254.5%
201.1%
Book value (end of period)
$ 14.91
$ 15.20
Tangible book value (end of period) (4)
9.30
10.68
Stock price:
High
17.08
18.54
Low
12.20
14.72
Close (end of period)
14.01
16.70
Common shares (end of period) (in millions) (4)
350.07
335.63
Weighted average diluted common shares (in millions)
352.67
333.17
(1) Includes net security gains of $22.0 million for the twelve months ended Dec. 31, 2009.
(2) Includes a total of $58.9 million and $4.5 million of merger-related expenses, core system conversion
costs and one-time charges for the twelve months ended Dec. 31, 2010 and 2009, respectively. Also
includes an FDIC special assessment charge of $8.4 million for the twelve months ended Dec. 31, 2009.
(3) Operating earnings were $125.4 million and $104.3 million for the twelve months ended Dec. 31, 2010
and Dec. 31, 2009, respectively.
(4) See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
As of and for the Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Financial Condition Data:
General:
Total assets
$ 25,037
$ 21,897
$ 21,950
$ 21,588
$ 21,257
Loans
17,518
15,215
15,215
15,311
14,234
Securities
3,033
2,478
1,787
886
902
Short-term investments (1)
1,120
1,218
1,944
2,527
3,492
Allowance for loan losses
173
173
173
173
173
Goodwill and other acquisition-related intangibles
1,962
1,772
1,778
1,767
1,515
Deposits
17,933
15,675
15,834
15,397
15,446
Borrowings
1,011
254
141
175
159
Subordinated notes
182
183
183
182
182
Stockholders' equity
5,219
5,365
5,413
5,479
5,101
Non-performing assets (2)
303
312
285
248
206
Net loan charge-offs
10.9
21.8
17.8
9.5
13.6
Average Balances:
Loans
$ 15,922
$ 15,208
$ 15,319
$ 14,680
$ 14,231
Securities
2,457
1,856
1,097
888
887
Short-term investments (1)
1,418
1,892
2,534
2,901
3,464
Total earning assets
19,797
18,956
18,950
18,469
18,582
Total assets
22,961
21,955
21,872
21,260
21,132
Deposits
16,531
15,801
15,704
15,202
15,273
Total funding liabilities
17,236
16,175
16,052
15,573
15,616
Stockholders' equity
5,335
5,404
5,458
5,275
5,106
Ratios:
Net loan charge-offs to
average loans (annualized)
0.28%
0.57%
0.46%
0.26%
0.38%
Non-performing assets to originated loans,
REO and repossessed assets (2)
2.07
2.18
2.01
1.74
1.44
Allowance for loan losses to:
Originated loans (2)
1.18
1.21
1.23
1.22
1.21
Originated non-performing loans (2)
70.4
68.6
78.5
89.7
102.2
Average stockholders' equity to average total assets
23.2
24.6
25.0
24.8
24.2
Stockholders' equity to total assets
20.8
24.5
24.7
25.4
24.0
Tangible stockholders' equity to tangible assets
14.1
17.8
18.0
18.7
18.2
Total risk-based capital (3)
14.8
16.4
16.6
16.3
14.1
(1) Includes securities purchased under agreements to resell.
(2) Excludes acquired loans.
(3) Total risk-based capital ratios are for People's United Bank and, as such, do not reflect the additional capital residing
at People's United Financial, Inc. People's United Bank's Dec. 31, 2010 total risk-based capital ratio is preliminary.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
Dec. 31,
Sept. 30,
Dec. 31,
(in millions)
2010
2010
2009
Assets
Cash and due from banks
$ 354.7
$ 320.3
$ 326.0
Short-term investments
599.8
478.1
3,092.0
Total cash and cash equivalents
954.5
798.4
3,418.0
Securities purchased under agreements to resell
520.0
740.0
400.0
Securities:
Trading account securities, at fair value
83.5
83.5
75.7
Securities available for sale, at fair value
2,831.1
2,305.0
739.7
Securities held to maturity, at amortized cost
55.1
55.1
55.3
Federal Home Loan Bank stock, at cost
63.6
33.9
31.1
Total securities
3,033.3
2,477.5
901.8
Loans:
Commercial real estate
7,306.3
5,493.1
5,399.4
Commercial
5,196.0
5,070.7
4,042.5
Residential mortgage
2,838.0
2,474.5
2,546.9
Consumer
2,177.9
2,176.5
2,245.0
Total loans
17,518.2
15,214.8
14,233.8
Less allowance for loan losses
(172.5)
(172.5)
(172.5)
Total loans, net
17,345.7
15,042.3
14,061.3
Goodwill and other acquisition-related intangibles
1,962.0
1,772.3
1,515.2
Premises and equipment
325.1
254.1
264.5
Bank-owned life insurance
291.8
253.6
250.5
Other assets
604.7
559.1
445.9
Total assets
$ 25,037.1
$ 21,897.3
$ 21,257.2
Liabilities
Deposits:
Non-interest-bearing
$ 3,872.6
$ 3,427.2
$ 3,509.0
Savings, interest-bearing checking and money market
8,897.8
7,880.1
7,327.9
Time
5,162.7
4,367.6
4,608.7
Total deposits
17,933.1
15,674.9
15,445.6
Borrowings:
Federal Home Loan Bank advances
509.3
9.7
14.8
Repurchase agreements
501.3
244.2
144.1
Total borrowings
1,010.6
253.9
158.9
Subordinated notes
182.2
182.9
181.8
Other liabilities
691.9
421.1
370.2
Total liabilities
19,817.8
16,532.8
16,156.5
Stockholders' Equity
Common stock ($0.01 par value; 1.95 billion shares authorized;
376.6 million shares, 374.6 million shares and 348.2 million shares issued)
3.7
3.7
3.5
Additional paid-in capital
4,978.8
4,946.0
4,511.3
Retained earnings
772.6
798.5
914.5
Treasury stock, at cost (17.5 million shares, 8.8 million shares and 3.2 million shares)
(248.9)
(134.6)
(58.6)
Accumulated other comprehensive loss
(99.0)
(59.4)
(74.8)
Unallocated common stock of Employee Stock Ownership Plan, at cost
(9.0 million shares, 9.1 million shares and 9.4 million shares)
(187.9)
(189.7)
(195.2)
Total stockholders' equity
5,219.3
5,364.5
5,100.7
Total liabilities and stockholders' equity
$ 25,037.1
$ 21,897.3
$ 21,257.2
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(in millions, except per share data)
2010
2010
2010
2010
2009
Interest and dividend income:
Commercial real estate
$ 85.9
$ 76.3
$ 75.6
$ 74.3
$ 74.1
Commercial
70.5
68.1
69.7
58.0
48.1
Residential mortgage
27.8
27.1
28.3
28.6
31.4
Consumer
22.1
22.2
22.5
22.8
23.5
Total interest on loans
206.3
193.7
196.1
183.7
177.1
Securities
13.6
12.6
9.2
8.1
8.4
Short-term investments
0.6
0.8
1.5
1.7
1.8
Securities purchased under agreements to resell
0.3
0.4
0.1
0.1
0.2
Total interest and dividend income
220.8
207.5
206.9
193.6
187.5
Interest expense:
Deposits
26.5
27.6
29.0
29.7
35.9
Borrowings
1.2
0.3
0.3
0.5
0.4
Subordinated notes
3.3
3.8
3.8
3.8
3.7
Total interest expense
31.0
31.7
33.1
34.0
40.0
Net interest income
189.8
175.8
173.8
159.6
147.5
Provision for loan losses
10.9
21.8
17.8
9.5
13.6
Net interest income after provision for loan losses
178.9
154.0
156.0
150.1
133.9
Non-interest income:
Investment management fees
7.9
7.6
8.6
7.9
7.9
Insurance revenue
6.9
8.3
6.3
7.3
7.0
Brokerage commissions
2.9
2.8
2.8
2.8
2.9
Total wealth management income
17.7
18.7
17.7
18.0
17.8
Bank service charges
30.7
31.5
32.9
31.2
32.2
Merchant services income
6.4
6.9
6.4
5.8
6.3
Net gains on sales of residential mortgage loans
4.2
2.4
2.7
2.8
3.0
Bank-owned life insurance
1.0
1.4
2.6
1.8
1.9
Net security losses
(1.0)
-
-
-
(0.1)
Other non-interest income
16.9
15.0
14.5
11.0
10.6
Total non-interest income
75.9
75.9
76.8
70.6
71.7
Non-interest expense:
Compensation and benefits
98.3
93.2
92.6
96.3
89.2
Occupancy and equipment
28.1
28.0
28.5
29.8
28.0
Professional and outside service fees
19.8
18.5
20.8
13.6
10.0
Amortization of other acquisition-related intangibles
6.1
6.1
4.8
4.7
5.0
Merchant services expense
5.3
5.8
5.3
4.8
5.2
Merger-related expenses
4.8
1.0
2.8
14.7
2.0
Other non-interest expense
44.5
41.6
55.0
36.4
32.8
Total non-interest expense
206.9
194.2
209.8
200.3
172.2
Income before income tax expense
47.9
35.7
23.0
20.4
33.4
Income tax expense
15.9
11.6
7.0
6.8
8.5
Net income
$ 32.0
$ 24.1
$ 16.0
$ 13.6
$ 24.9
Basic and diluted earnings per common share
$ 0.09
$ 0.07
$ 0.04
$ 0.04
$ 0.07
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Twelve Months Ended
Dec. 31,
Dec. 31,
(in millions, except per share data)
2010
2009
Interest and dividend income:
Commercial real estate
$ 312.1
$ 287.8
Commercial
266.3
198.9
Residential mortgage
111.8
145.0
Consumer
89.6
95.4
Total interest on loans
779.8
727.1
Securities
43.5
32.4
Short-term investments
4.6
6.5
Securities purchased under agreements to resell
0.9
0.8
Total interest and dividend income
828.8
766.8
Interest expense:
Deposits
112.8
173.4
Borrowings
2.3
1.5
Subordinated notes
14.7
15.1
Total interest expense
129.8
190.0
Net interest income
699.0
576.8
Provision for loan losses
60.0
57.0
Net interest income after provision for loan losses
639.0
519.8
Non-interest income:
Investment management fees
32.0
32.4
Insurance revenue
28.8
30.0
Brokerage commissions
11.3
12.2
Total wealth management
72.1
74.6
Bank service charges
126.3
128.8
Merchant services income
25.5
24.9
Net gains on sales of residential mortgage loans
12.1
13.9
Bank-owned life insurance
6.7
8.4
Net security gains (losses)
(1.0)
22.0
Other non-interest income
57.5
36.5
Total non-interest income
299.2
309.1
Non-interest expense:
Compensation and benefits
380.4
350.5
Occupancy and equipment
114.4
109.8
Professional and outside service fees
72.7
44.0
Amortization of other acquisition-related intangibles
21.7
20.6
Merchant services expense
21.2
21.0
Merger-related expenses
23.3
2.0
Other non-interest expense
177.5
136.7
Total non-interest expense
811.2
684.6
Income before income tax expense
127.0
144.3
Income tax expense
41.3
43.1
Net income
$ 85.7
$ 101.2
Basic and diluted earnings per common share
$ 0.24
$ 0.30
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)
Dec. 31, 2010
Sept. 30, 2010
Three months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 814.7
$ 0.6
0.29%
$ 1,176.2
$ 0.8
0.28%
Securities purchased under
agreements to resell
603.9
0.3
0.21
715.8
0.4
0.21
Securities (2)
2,456.7
13.6
2.22
1,855.9
12.6
2.72
Loans:
Commercial real estate
6,054.3
85.9
5.67
5,464.7
76.3
5.59
Commercial
5,086.5
71.4
5.62
5,096.4
68.9
5.40
Residential mortgage
2,611.4
27.8
4.27
2,463.2
27.1
4.41
Consumer
2,169.5
22.1
4.07
2,184.1
22.2
4.06
Total loans
15,921.7
207.2
5.21
15,208.4
194.5
5.12
Total earning assets
19,797.0
$ 221.7
4.48%
18,956.3
$ 208.3
4.40%
Other assets
3,163.5
2,998.3
Total assets
$ 22,960.5
$ 21,954.6
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 3,633.5
$ -
- %
$ 3,432.4
$ -
- %
Savings, interest-bearing checking
and money market
8,249.0
11.5
0.56
7,929.6
12.0
0.61
Time
4,648.4
15.0
1.29
4,439.1
15.6
1.40
Total deposits
16,530.9
26.5
0.64
15,801.1
27.6
0.70
Borrowings:
Repurchase agreements
350.0
0.5
0.54
178.5
0.2
0.47
Federal Home Loan Bank advances
178.2
0.7
1.68
9.8
0.1
5.19
Other
5.2
-
0.39
2.7
-
-
Total borrowings
533.4
1.2
0.92
191.0
0.3
0.71
Subordinated notes
171.3
3.3
7.75
182.7
3.8
8.28
Total funding liabilities
17,235.6
$ 31.0
0.72%
16,174.8
$ 31.7
0.78%
Other liabilities
390.0
375.6
Total liabilities
17,625.6
16,550.4
Stockholders' equity
5,334.9
5,404.2
Total liabilities and stockholders' equity
$ 22,960.5
$ 21,954.6
Net interest income/spread (3)
$ 190.7
3.76%
$ 176.6
3.62%
Net interest margin
3.85%
3.73%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on amortized cost.
(3) The FTE adjustment was $0.9 million, $0.8 million and $0.8 million for the three months ended Dec. 31. 2010, Sept. 30, 2010
and Dec. 31, 2009, respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)
Dec. 31, 2009
Three months ended
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Assets:
Short-term investments
$ 2,822.4
$ 1.8
0.26%
Securities purchased under
agreements to resell
641.2
0.2
0.17
Securities (2)
887.1
8.4
3.76
Loans:
Commercial real estate
5,352.0
74.1
5.53
Commercial
4,010.8
48.9
4.88
Residential mortgage
2,609.4
31.4
4.81
Consumer
2,258.9
23.5
4.16
Total loans
14,231.1
177.9
5.00
Total earning assets
18,581.8
$ 188.3
4.05%
Other assets
2,550.3
Total assets
$ 21,132.1
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 3,320.4
$ -
- %
Savings, interest-bearing checking
and money market
7,145.4
11.9
0.66
Time
4,807.2
24.0
2.00
Total deposits
15,273.0
35.9
0.94
Borrowings:
Repurchase agreements
146.3
0.2
0.49
Federal Home Loan Bank advances
14.9
0.2
5.25
Other
-
-
-
Total borrowings
161.2
0.4
0.93
Subordinated notes
181.7
3.7
8.32
Total funding liabilities
15,615.9
$ 40.0
1.03%
Other liabilities
410.3
Total liabilities
16,026.2
Stockholders' equity
5,105.9
Total liabilities and stockholders' equity
$ 21,132.1
Net interest income/spread (3)
$ 148.3
3.02%
Net interest margin
3.19%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on amortized cost.
(3) The FTE adjustment was $0.9 million, $0.8 million and $0.8 million for the three
months ended Dec. 31. 2010, Sept. 30, 2010 and Dec. 31, 2009, respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
Dec. 31, 2010
Dec. 31, 2009
Twelve months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 1,725.0
$ 4.6
0.27%
$ 2,386.5
$ 6.5
0.27%
Securities purchased under agreements to resell
456.2
0.9
0.20
421.1
0.8
0.19
Securities (1)
1,579.5
43.5
2.76
934.2
32.4
3.47
Loans:
Commercial real estate
5,594.8
312.1
5.58
5,208.5
287.8
5.52
Commercial
4,961.9
269.6
5.43
4,116.7
202.3
4.91
Residential mortgage
2,529.7
111.8
4.42
2,880.1
145.0
5.04
Consumer
2,199.2
89.6
4.07
2,264.4
95.4
4.21
Total loans
15,285.6
783.1
5.12
14,469.7
730.5
5.05
Total earning assets
19,046.3
$ 832.1
4.37%
18,211.5
$ 770.2
4.23%
Other assets
2,969.9
2,546.0
Total assets
$ 22,016.2
$ 20,757.5
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 3,426.0
$ -
- %
$ 3,210.8
$ -
- %
Savings, interest-bearing checking and money market
7,853.6
47.4
0.60
6,710.6
48.2
0.72
Time
4,533.5
65.4
1.44
4,966.9
125.2
2.52
Total deposits
15,813.1
112.8
0.71
14,888.3
173.4
1.16
Borrowings:
Repurchase agreements
211.7
1.0
0.49
151.2
0.7
0.46
Federal Home Loan Bank advances
52.3
1.1
2.22
14.8
0.8
5.28
Other
6.5
0.2
2.70
2.1
-
1.92
Total borrowings
270.5
2.3
0.88
168.1
1.5
0.90
Subordinated notes
179.6
14.7
8.17
181.2
15.1
8.35
Total funding liabilities
16,263.2
$ 129.8
0.80%
15,237.6
$ 190.0
1.25%
Other liabilities
384.7
378.5
Total liabilities
16,647.9
15,616.1
Stockholders' equity
5,368.3
5,141.4
Total liabilities and stockholders' equity
$ 22,016.2
$ 20,757.5
Net interest income/spread (2)
$ 702.3
3.57%
$ 580.2
2.98%
Net interest margin
3.69%
3.19%
(1) Average balances and yields for securities available for sale are based on amortized cost.
(2) The FTE adjustment was $3.3 million and $3.4 million for the twelve months
ended Dec. 31, 2010 and 2009, respectively.
People's United Financial, Inc.
NON-PERFORMING ASSETS
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Originated non-performing loans:
Commercial real estate
$ 82.5
$ 85.0
$ 67.2
$ 65.8
$ 72.4
Residential mortgage
78.8
87.0
80.9
66.7
52.7
Commercial
38.2
34.3
25.2
28.9
17.4
Equipment financing
36.0
35.1
37.0
23.1
20.6
Consumer
9.7
10.0
9.4
7.8
5.7
Total originated non-performing loans (1)
245.2
251.4
219.7
192.3
168.8
Repossessed assets
18.1
25.7
27.6
31.8
12.9
Real estate owned ("REO")
39.8
34.9
37.2
23.4
23.9
Total non-performing assets
$ 303.1
$ 312.0
$ 284.5
$ 247.5
$ 205.6
Acquired non-performing loans (2)
$ 359.8
$ 59.4
$ 60.1
$ 51.7
$ -
Originated non-performing loans as a percentage of originated loans (3)
1.68%
1.77%
1.56%
1.36%
1.19%
Non-performing assets as a percentage of:
Originated loans, REO and repossessed assets (3)
2.07
2.18
2.01
1.74
1.44
Tangible stockholders' equity and allowance for loan losses
8.82
8.29
7.47
6.37
5.47
(1) Reported net of government guarantees totaling $9.4 million at Dec. 31, 2010, $8.8 million at Sept. 30, 2010, $6.8 million
at June 30, 2010, $7.3 million at March 31, 2010 and $8.3 million at Dec. 31, 2009.
(2) Represents acquired loans that meet People's United's definition of a non-performing loan but for which the risk of credit loss has
been considered by virtue of our estimate of acquisition-date fair value and/or the existence of an FDIC loss-share agreement.
(3) Calculations exclude acquired loans. Including acquired loans and acquired non-performing loans at Dec. 31, 2010, Sept. 30, 2010,
June 30, 2010 and March 31, 2010, non-performing loans were 3.45%, 2.04%, 1.84% and 1.59% of total loans, and non-performing
assets were 3.77%, 2.43%, 2.26% and 1.95% of total loans, REO and repossessed assets, respectively.
PROVISION AND ALLOWANCE FOR LOAN LOSSE S
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Balance at beginning of period
$ 172.5
$ 172.5
$ 172.5
$ 172.5
$ 172.5
Charge-offs
(12.2)
(22.6)
(19.0)
(10.9)
(14.5)
Recoveries
1.3
0.8
1.2
1.4
0.9
Net loan charge-offs
(10.9)
(21.8)
(17.8)
(9.5)
(13.6)
Provision for loan losses
10.9
21.8
17.8
9.5
13.6
Balance at end of period
$ 172.5
$ 172.5
$ 172.5
$ 172.5
$ 172.5
Allowance for loan losses as a percentage of:
Originated loans
1.18%
1.21%
1.23%
1.22%
1.21%
Originated non-performing loans
70.3
68.6
78.5
89.7
102.2
NET LOAN CHARGE-OFFS
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Equipment financing
$ 3.0
$ 1.6
$ 3.7
$ 0.9
$ 4.0
Commercial real estate
2.6
13.5
4.8
5.8
1.5
Residential mortgage
2.0
1.2
0.4
0.1
1.2
Consumer
1.9
2.4
0.9
1.9
2.6
Commercial
1.4
3.1
8.0
0.8
4.3
Total
$ 10.9
$ 21.8
$ 17.8
$ 9.5
$ 13.6
Net loan charge-offs to average loans (annualized)
0.28%
0.57%
0.46%
0.26%
0.38%
People's United Financial, Inc.
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. 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 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 intangibles and fair value adjustments, losses on
real estate assets and non-recurring expenses) (the numerator) to (ii) net interest income on a fully taxable
equivalent basis (excluding fair value adjustments) plus total non-interest income (including the fully taxable
equivalent adjustment on bank-owned life insurance income, and excluding gains and losses on sales of
assets, other than residential mortgage 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.
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, core
system conversion costs, and one-time charges related to executive-level management separation
agreements, are generally also excluded when calculating the efficiency ratio. Operating earnings per share
is calculated by dividing operating earnings by the weighted average number of dilutive common shares
outstanding 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 intangibles) (the numerator) to (ii) tangible assets (total assets less
goodwill and other acquisition-related intangibles) (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 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.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
EFFICIENCY RATIO
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Total non-interest expense
$ 206.9
$ 194.2
$ 209.8
$ 200.3
$ 172.2
Less: Amortization of other
acquisition-related intangibles
6.1
6.1
4.8
4.7
5.0
Fair value adjustments
0.8
0.8
0.8
0.8
0.8
Other
7.4
3.9
18.9
17.6
2.5
Total
$ 192.6
$ 183.4
$ 185.3
$ 177.2
$ 163.9
Net interest income (1)
$ 190.7
$ 176.6
$ 174.6
$ 160.4
$ 148.3
Total non-interest income
75.9
75.9
76.8
70.6
71.7
Add: Fair value adjustments
(2.5)
1.0
1.0
1.6
1.6
Net security losses
1.0
-
-
-
0.1
BOLI FTE adjustment (1)
0.5
0.7
1.4
1.0
1.0
Less: Net security gains
-
-
-
-
-
Other
-
-
-
-
0.3
Total
$ 265.6
$ 254.2
$ 253.8
$ 233.6
$ 222.4
Efficiency ratio
72.5%
72.1%
73.0%
75.9%
73.7%
(1) Fully taxable equivalent
OPERATING EARNINGS
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions, except per share data)
2010
2010
2010
2010
2009
Net income, as reported
$ 32.0
$ 24.1
$ 16.0
$ 13.6
$ 24.9
Add: Adjustments, net of tax (1)
4.7
3.6
15.8
15.6
3.1
Operating earnings
$ 36.7
$ 27.7
$ 31.8
$ 29.2
$ 28.0
Operating earnings per share
$ 0.10
$ 0.08
$ 0.09
$ 0.08
$ 0.08
(1) Represents pre-tax merger-related expenses, core system conversion costs and
one-time charges totaling $7.0 million, $5.3 million, $23.2 million, $23.4 million and
$4.5 million for the three months ended Dec. 31, 2010, Sept. 30, 2010,
June 30, 2010, March 31, 2010 and Dec. 31, 2009, respectively, less related income taxes.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
EFFICIENCY RATIO
Twelve Months Ended
Dec. 31,
Dec. 31,
(dollars in millions)
2010
2009
Total non-interest expense
$ 811.2
$ 684.6
Less: Amortization of other
acquisition-related intangibles
21.7
20.6
Fair value adjustments
3.2
3.1
Other
47.8
16.9
Total
$ 738.5
$ 644.0
Net interest income (1)
$ 702.3
$ 580.2
Total non-interest income
299.2
309.1
Add: Fair value adjustments
1.1
6.5
Net security losses
1.0
-
BOLI FTE adjustment (1)
3.6
4.5
Less: Net security gains
-
22.0
Other
-
1.9
Total
$ 1,007.2
$ 876.4
Efficiency ratio
73.3%
73.5%
(1) Fully taxable equivalent
OPERATING EARNINGS
Twelve Months Ended
Dec. 31,
Dec. 31,
(dollars in millions, except per share data)
2010
2009
Net income, as reported
$ 85.7
$ 101.2
Add: Adjustments, net of tax (1)
39.7
3.1
Operating earnings
$ 125.4
$ 104.3
Operating earnings per share
$ 0.35
$ 0.31
(1) Represents pre-tax merger-related expenses, core system conversion costs and one-time
charges totaling $58.9 million and $4.5 million for the twelve months ended Dec. 31, 2010
and 2009, respectively, less related income taxes.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
TANGIBLE STOCKHOLDERS' EQUITY
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2010
2010
2010
2010
2009
Total stockholders' equity
$ 5,219
$ 5,365
$ 5,413
$ 5,479
$ 5,101
Less: Goodwill and other
acquisition-related intangibles
1,962
1,772
1,778
1,767
1,515
Tangible stockholders' equity
$ 3,257
$ 3,593
$ 3,635
$ 3,712
$ 3,586
Total assets
$ 25,037
$ 21,897
$ 21,950
$ 21,588
$ 21,257
Less: Goodwill and other
acquisition-related intangibles
1,962
1,772
1,778
1,767
1,515
Tangible assets
$ 23,075
$ 20,125
$ 20,172
$ 19,821
$ 19,742
Tangible equity ratio
14.1%
17.8%
18.0%
18.7%
18.2%
TANGIBLE BOOK VALUE
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(in millions, except per share data)
2010
2010
2010
2010
2009
Common shares issued
376.62
374.63
374.64
374.76
348.25
Less: Common shares classified as treasury shares
17.49
8.75
6.90
3.19
3.21
Unallocated ESOP common shares
9.06
9.15
9.23
9.32
9.41
Common shares
350.07
356.73
358.51
362.25
335.63
Tangible book value per share
$ 9.30
$ 10.07
$ 10.14
$ 10.25
$ 10.68
SOURCE People's United Financial, Inc.
CONTACT: Investors, Peter Goulding, CFA, Investor Relations, +1-203-338-6799, [email protected], or Media, Brent DiGiorgio, Corporate Communications, +1-203-338-3135, [email protected]
Web Site: http://www.peoples.com