People's United Financial, Inc (NASDAQ: PBCT) today announced net income of$43.0 million, or$0.12per share, for the fourth quarter of 2011, compared to$32.0 million, or$0.09per share, for the fourth quarter of 2010, and$52.9 million, or$0.15per share, for the third quarter of 2011. Operating earnings were$58.7 million, or$0.17per share, for the fourth quarter of 2011, compared to$36.7 million, or$0.10per share, for the fourth quarter of 2010 and$67.3 million, or$0.19per share, for this year's third quarter. Included in the quarterly results are merger-related expenses and one-time charges (after-tax) totaling$15.7 millionin the fourth quarter of 2011,$4.7 millionin the fourth quarter of 2010 and$14.4 millionin the third quarter of 2011.
For the year endedDecember 31, 2011, net income totaled$198.8 million, or$0.57per share, compared to$85.7 million, or$0.24per share, for 2010. Operating earnings were$237.1 million, or$0.68per share, for 2011, compared to$125.4 million, or$0.35per share, for 2010. Included in both the 2011 and 2010 results are$38.3 millionand$39.7 million(after-tax), respectively, of merger-related expenses, core system conversion costs and one-time charges.
The Board of Directors of People's United Financial declared a$0.1575per share quarterly dividend, payableFebruary 15, 2012to shareholders of record onFebruary 1, 2012. Based on the closing stock price onJanuary 18, 2012, the dividend yield on People's United Financial common stock is 4.2 percent.
"Our performance throughout 2011 reflects the significant progress we have made in carrying out our two primary objectives - optimizing existing businesses and efficiently deploying capital," statedJack Barnes, President and Chief Executive Officer. "Our focus on organic loan and deposit growth throughout the franchise, including new market opportunities within theBostonand New York City MSAs, has resulted in improved operating leverage, which is evident in our 2011 financial results."
Barnes added, "Integration of acquisitions has become a core competency for this organization. We have now integrated five acquisitions since early 2010 and exceeded our estimated cost benefits announced at the time of each transaction. Our momentum is based on a 170-year track record with continued outstanding customer service throughout the financial crisis. Offering the full breadth of products and services that our customers need, providing relationship-based solutions, and effectively cross-selling our products across all lines of business are key contributors to our continued growth and strong operating performance."
Barnes concluded, "We remain focused on delivering shareholder value by leveraging opportunities within our existing markets. Further, we have demonstrated our ability to prudently and effectively deploy capital through organic loan and deposit growth, adherence to a strong dividend policy, share repurchases and a thoughtful acquisition strategy."
"On an operating basis, earnings were$59 million, or17 centsper share, this quarter," saidKirk W. Walters, Senior Executive Vice President and Chief Financial Officer. "The Company's performance this quarter reflects an improvement in net interest income, higher provision expense, an expected decline in fee income, and tighter expense control."
Walters continued, "The net interest margin increased 29 basis points in the fourth quarter of 2011 compared to last year's fourth quarter and 5 basis points compared to the third quarter of 2011. The operating net interest margin was 4.07 percent in the fourth quarter of 2011 compared to 4.11 percent in the third quarter. Included in this quarter's net interest margin is$5 millionof cost recovery income from the acquired loan portfolio, which added nine basis points to the margin. As expected, non-interest income declined$13 millionfrom the prior quarter, which was driven by a decrease in bank service charges of approximately$5 milliondue to changes brought about by the Dodd-Frank Act and lower net security gains of$8.6 million. The decrease in the level of operating non-interest expense this quarter reflects the continued benefit from cost-savings initiatives announced earlier in 2011."
Walters concluded, "While the overall level of non-performing loans is reflective of a period of prolonged economic weakness, we are pleased with the credit trends noted over the past few quarters. In fact, throughout 2011, our net loan charge-off ratio represented less than one-third that of our peers', which is a reflection of the Company's historically strong underwriting standards, the strength of the footprint in which we operate and the resilience of our customers who have successfully managed through the economic crisis."
AtDecember 31, 2011, People's United Financial's tier 1 common and total risk-based capital ratios were 14.3 percent and 16.2 percent, respectively, and the tangible equity ratio stood at 12.0 percent. People's United Bank's tier 1 and total risk-based capital ratios were 13.1 percent and 14.0 percent, respectively, atDecember 31, 2011.
Operating return on average assets was 0.86 percent for the fourth quarter of 2011, compared to 0.98 percent for the third quarter of 2011 and 0.64 percent for the fourth quarter of 2010. Operating return on average tangible stockholders' equity was 7.4 percent for the fourth quarter of 2011, compared to 8.0 percent for the third quarter of 2011 and 4.2 percent for the fourth quarter of 2010.
Loans acquired in connection with acquisitions have been recorded at fair value based on an initial estimate of expected cash flows, including a reduction for estimated credit losses, and without carryover of the respective portfolio's historical allowance for loan losses. A decrease in expected cash flows in subsequent periods may indicate that a loan is impaired, which would require the establishment of an allowance for loan losses. As such, selected asset quality metrics have been highlighted to distinguish between the 'originated' portfolio and the 'acquired' portfolio.
AtDecember 31, 2011, the allowance for loan losses for originated loans as a percentage of originated loans, which represents all loans other than those acquired, was 1.04 percent and as a percentage of originated non-performing loans was 60 percent, compared to 1.09 percent and 69 percent, respectively, atSeptember 30, 2011. For the originated commercial banking portfolio, the allowance for loan losses ratio was 1.39 percent atDecember 31, 2011and represented 77 percent of non-performing commercial banking loans at that date.
For the originated loan portfolio, non-performing loans equaled 1.75 percent of originated loans atDecember 31, 2011, compared to 1.60 percent atSeptember 30, 2011and 1.70 percent atDecember 31, 2010. Non-performing assets (excluding acquired non-performing loans) equaled 2.00 percent of originated loans, REO and repossessed assets atDecember 31, 2011compared to 1.88 percent atSeptember 30, 2011and 2.09 percent atDecember 31, 2010.
Non-performing loans in the acquired portfolio, which represent the contractual balances of 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$249.0 millionatDecember 31, 2011compared to$241.6 millionatSeptember 30, 2011and$359.8 millionatDecember 31, 2010.
Fourth quarter net loan charge-offs totaled$14.8 millioncompared to$13.4 millionin the third quarter of 2011. Net loan charge-offs as a percent of average loans on an annualized basis were 0.29 percent in the fourth quarter of 2011 compared to 0.27 percent in this year's third quarter. The provision for loan losses in the fourth quarter of 2011 reflects a$7.4 millionincrease in the allowance for loan losses on originated loans related to the growth in the commercial and residential mortgage loan portfolios and a$7.4 millionincrease due to impairment on acquired loans, partially offset by charge-offs of$8.9 millionagainst previously established specific reserves.
People's United Financial, a diversified financial services company with$28 billionin assets, provides commercial and retail banking, as well as wealth management services through a network of 372 branches inConnecticut,Massachusetts,Vermont,New York,New HampshireandMaine. Through its subsidiaries, People's United Financial provides equipment financing, brokerage and insurance services.
Conference Call
OnJanuary 19, 2012, at5 p.m., Eastern Time, People's United Financial will host a conference call to discuss this earnings announcement. The call may be heard throughwww.peoples.comby 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 2011 Financial Highlights
Summary
Net income was$43.0 million, or$0.12per share.
Operating earnings were$58.7 million, or$0.17per share.
Net interest income totaled$242.1 million.
Net interest margin increased 5 basis points from 3Q11 to 4.16%.
Cost recovery income on acquired loans, representing cash receipts in excess of carrying amount, totaled$5 millionin 4Q11 and contributed 9 basis points.
The normalized yield on loans in 4Q11, which excludes cost recovery income, reduced the net interest margin by 10 basis points.
Lower funding costs in 4Q11 benefited the net interest margin by 6 basis points.
Provision for loan losses totaled$20.7 million.
Net loan charge-offs totaled$14.8 million, of which$8.9 millionrelated to loans with specific reserves established in prior periods.
Allowance for loan losses on originated loans in 4Q11 reflects a$7.4 millionincrease in response to loan growth.
Includes a provision for loan losses on acquired loans of$7.4 million.
Non-interest income was$71.7 millionin 4Q11 compared to$84.7 millionin 3Q11.
Bank service charges decreased$4.2 millionin 4Q11 to$31.6 million, primarily as a result of certain provisions of the Dodd-Frank Act, which became effective inOctober 2011.
Insurance revenue decreased$1.8 millionfrom 3Q11, primarily reflecting the seasonal nature of insurance renewals.
4Q11 and 3Q11 include losses of$0.4 millionand$4.8 million, respectively, on sales of acquired loans.
Loan prepayment fees declined$2.7 millionfrom 3Q11.
3Q11 includes net security gains of$8.6 million(none in 4Q11).
Non-interest expense totaled$230.2 millionin 4Q11 compared to$231.9 millionin 3Q11.
Operating non-interest expense was$207.2 millionin 4Q11 compared to$210.4 millionin 3Q11, reflecting declines in compensation and benefits, occupancy and equipment, and other non-interest expense.
4Q11 and 3Q11 include$23.0 millionand$21.5 million, respectively, of merger-related expenses and one-time charges.
4Q11 includes a$1.4 millioncharge relating to Visa Inc.'s funding of its litigation escrow account.
Effective income tax rate was 31.6% for 4Q11 and 32.7% for 2011.
Commercial Banking
Excluding acquired loans, commercial banking loans increased$470 million, or 17% annualized, fromSeptember 30, 2011.
Average commercial banking loans totaled$14.4 billion, an increase of$156 million, or 4% annualized, from 3Q11.
Non-performing commercial banking assets, excluding acquired non-performing loans, totaled$240.8 millionatDecember 31, 2011, up from$213.1 millionatSeptember 30, 2011.
The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 1.81% atDecember 31, 2011compared to 1.61% atSeptember 30, 2011.
Net loan charge-offs totaled$11.8 million, or 0.33% annualized, of average commercial banking loans in 4Q11, compared to$9.8 million, or 0.28% annualized, in 3Q11.
For the originated commercial banking portfolio, the allowance for loan losses as a percentage of loans was 1.39% atDecember 31, 2011compared to 1.48% atSeptember 30, 2011.
The commercial banking allowance for loan losses represented 77% of originated non-performing commercial banking loans atDecember 31, 2011compared to 92% atSeptember 30, 2011.
Commercial deposits totaled$5.2 billionatDecember 31, 2011compared to$5.0 billionatSeptember 30, 2011.
Retail Banking
Excluding acquired loans, residential mortgage loans increased$168 million, or 23% annualized, fromSeptember 30, 2011.
The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 2.19% atDecember 31, 2011, unchanged fromSeptember 30, 2011.
Average residential mortgage loans totaled$3.6 billion, an increase of$215 million, or 26% annualized, from 3Q11.
Net loan charge-offs totaled$1.6 million, or 0.18% annualized, of average residential mortgage loans in 4Q11, compared to$2.1 million, or 0.25% annualized, in 3Q11.
Excluding acquired loans, home equity loans remained unchanged fromSeptember 30, 2011.
The ratio of originated non-performing home equity loans to originated home equity loans was 0.82% atDecember 31, 2011compared to 0.74% atSeptember 30, 2011.
Average home equity loans totaled$2.1 billionin 4Q11, unchanged from 3Q11.
Net loan charge-offs totaled$0.7 million, or 0.15% annualized, of average home equity loans in 4Q11, compared to$1.1 million, or 0.21% annualized, in 3Q11.
Retail deposits totaled$15.6 billionatDecember 31, 2011compared to$15.5 billionatSeptember 30, 2011.
Wealth Management and Insurance
Insurance revenue decreased$1.8 millionfrom 3Q11, primarily reflecting the seasonal nature of insurance renewals, and increased$0.3 millionfrom 4Q10.
Brokerage commissions declined$0.2 millionfrom 3Q11 and$0.3 millionfrom 4Q10, primarily reflecting lower commissions on mutual funds and fixed income products due to the uncertainty in the equity markets and the low interest rate environment.
Investment management fees decreased$0.1 millionfrom 3Q11 and increased$0.4 millionfrom 4Q10.
Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled$12.5 billionand$4.3 billion, respectively, atDecember 31, 2011.
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) 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.
Access Information About People's United Financial atwww.peoples.com.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions, except per share data)
2011
2011
2011
2011
2010
Earnings Data:
Net interest income
$ 242.1
$ 240.0
$ 221.2
$ 220.3
$ 189.8
Provision for loan losses
20.7
14.4
14.0
14.6
10.9
Non-interest income (1)
71.7
84.7
76.6
74.6
68.1
Non-interest expense (2)
230.2
231.9
207.0
202.8
199.1
Income before income tax expense
62.9
78.4
76.8
77.5
47.9
Net income
43.0
52.9
51.2
51.7
32.0
Operating earnings (3)
58.7
67.3
57.3
53.8
36.7
Selected Statistical Data:
Net interest margin (4)
4.16%
4.11%
4.13%
4.16%
3.87%
Operating net interest margin (3), (4)
4.07
4.11
4.09
4.00
3.87
Return on average assets (4)
0.63
0.77
0.82
0.84
0.56
Operating return on average assets (3), (4)
0.86
0.98
0.92
0.87
0.64
Return on average tangible assets (4)
0.68
0.84
0.89
0.91
0.61
Return on average stockholders' equity (4)
3.2
3.8
4.0
4.0
2.4
Return on average tangible stockholders' equity (4)
5.4
6.3
6.3
6.4
3.7
Operating return on average tangible
stockholders' equity (3), (4)
7.4
8.0
7.1
6.7
4.2
Efficiency ratio (3)
62.7
63.1
65.7
66.2
71.1
Common Share Data:
Basic and diluted earnings per share
$ 0.12
$ 0.15
$ 0.15
$ 0.15
$ 0.09
Operating earnings per share (3)
0.17
0.19
0.17
0.15
0.10
Dividends paid per share
0.1575
0.1575
0.1575
0.1550
0.1550
Dividend payout ratio
127.7%
108.4%
106.4%
104.9%
172.5%
Operating dividend payout ratio (3)
93.4
85.3
95.1
100.7
150.4
Book value per share (end of period)
$ 14.99
$ 15.18
$ 15.01
$ 14.92
$ 14.91
Tangible book value per share (end of period) (3)
8.75
9.01
9.38
9.27
9.30
Stock price:
High
13.07
13.96
13.81
14.49
14.17
Low
10.91
10.50
12.55
12.17
12.20
Close (end of period)
12.85
11.40
13.44
12.58
14.01
Common shares (end of period) (in millions)
348.68
348.59
346.12
345.97
350.07
Weighted average diluted common shares (in millions)
346.68
358.28
343.88
346.01
352.53
(1) Includes net security gains (losses) of $8.6 million and $(1.0) million for the three months ended Sept. 30, 2011 and Dec. 31, 2010, respectively.
(2) Includes a total of $23.0 million, $21.5 million, $9.2 million, $3.1 million and $7.0 million of merger-related expenses,
core system conversion costs and one-time charges for the three months ended Dec. 31, 2011, Sept. 30, 2011,
June 30, 2011, March 31, 2011 and Dec. 31, 2010, respectively.
(3) See non-GAAP financial measures and reconciliation to GAAP.
(4) Annualized.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
Twelve Months Ended
December 31,
(dollars in millions, except per share data)
2011
2010
Earnings Data:
Net interest income
$ 923.6
$ 699.0
Provision for loan losses
63.7
60.0
Non-interest income
307.6
270.0
Non-interest expense (1)
871.9
782.0
Income before income tax expense
295.6
127.0
Net income
198.8
85.7
Operating earnings (2)
237.1
125.4
Selected Statistical Data:
Net interest margin
4.14%
3.70%
Operating net interest margin (2)
4.07
3.70
Return on average assets
0.76
0.39
Operating return on average assets (2)
0.91
0.57
Return on average tangible assets
0.83
0.42
Return on average stockholders' equity
3.8
1.6
Return on average tangible stockholders' equity
6.2
2.4
Operating return on average tangible
stockholders' equity (2)
7.4
3.5
Efficiency ratio (2)
64.4
72.4
Common Share Data:
Basic and diluted earnings per share
$ 0.57
$ 0.24
Operating earnings per share (2)
0.68
0.35
Dividends paid per share
0.6275
0.6175
Dividend payout ratio
111.1%
254.5%
Operating dividend payout ratio (2)
93.2
173.9
Book value per share (end of period)
$ 14.99
$ 14.91
Tangible book value per share (end of period) (2)
8.75
9.30
Stock price:
High
14.49
17.08
Low
10.50
12.20
Close (end of period)
12.85
14.01
Common shares (end of period) (in millions)
348.68
350.07
Weighted average diluted common shares (in millions)
348.74
352.67
(1) Includes a total of $56.8 million and $58.9 million of merger-related expenses, core system
conversion costs and one-time charges for the twelve months ended December 31, 2011
and 2010, respectively.
(2) 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)
2011
2011
2011
2011
2010
Financial Condition Data:
General:
Total assets
$ 27,568
$ 27,213
$ 25,323
$ 24,962
$ 25,037
Loans
20,400
20,148
17,687
17,523
17,328
Securities
2,931
2,540
3,226
3,203
3,033
Short-term investments (1)
411
779
822
926
1,120
Allowance for loan losses
183
177
176
178
173
Goodwill and other acquisition-related intangibles
2,174
2,151
1,947
1,953
1,962
Deposits
20,816
20,487
18,278
18,110
17,933
Borrowings
857
881
1,331
1,158
1,011
Subordinated notes and debentures
160
159
159
176
182
Stockholders' equity
5,225
5,291
5,194
5,160
5,219
Non-performing assets (2)
337
305
315
292
303
Net loan charge-offs
14.8
13.4
15.5
9.6
10.9
Average Balances:
Loans
$ 20,217
$ 19,856
$ 17,654
$ 17,290
$ 15,770
Securities
2,411
2,976
3,264
3,089
2,457
Short-term investments (1)
854
756
629
843
1,418
Residential mortgage loans held for sale
60
26
17
52
52
Total earning assets
23,542
23,614
21,564
21,274
19,697
Total assets
27,285
27,355
24,853
24,623
22,961
Deposits
20,597
20,259
18,225
17,944
16,531
Total funding liabilities
21,653
21,499
19,353
19,121
17,236
Stockholders' equity
5,302
5,515
5,177
5,185
5,335
Ratios:
Net loan charge-offs to
average loans (annualized)
0.29%
0.27%
0.35%
0.22%
0.28%
Non-performing assets to originated loans,
real estate owned and repossessed assets (2)
2.00
1.88
2.05
1.96
2.09
Allowance for loan losses to:
Originated loans (2)
1.04
1.09
1.15
1.19
1.19
Originated non-performing loans (2)
59.7
68.5
68.0
73.8
70.3
Average stockholders' equity to average total assets
19.4
20.2
20.8
21.1
23.2
Stockholders' equity to total assets
19.0
19.4
20.5
20.7
20.8
Tangible stockholders' equity to tangible assets (3)
12.0
12.5
13.9
13.9
14.1
Total risk-based capital (4)
16.2
16.7
19.1
19.4
19.3
(1) Includes securities purchased under agreements to resell.
(2) Excludes acquired loans.
(3) See non-GAAP financial measures and reconciliation to GAAP.
(4) Consolidated.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
Dec. 31,
Sept. 30,
Dec. 31,
(in millions)
2011
2011
2010
Assets
Cash and due from banks
$ 370.2
$ 370.9
$ 354.7
Short-term investments
410.7
779.1
599.8
Total cash and cash equivalents
780.9
1,150.0
954.5
Securities purchased under agreements to resell
-
-
520.0
Securities:
Trading account securities, at fair value
71.8
69.9
83.5
Securities available for sale, at fair value
2,725.5
2,336.0
2,831.1
Securities held to maturity, at amortized cost
56.4
56.4
55.1
Federal Home Loan Bank stock, at cost
77.7
77.7
63.6
Total securities
2,931.4
2,540.0
3,033.3
Residential mortgage loans held for sale
101.9
45.4
88.5
Loans:
Commercial (1)
7,382.0
7,262.5
5,196.0
Commercial real estate (1)
7,172.2
7,142.9
7,306.3
Residential mortgage
3,628.4
3,502.0
2,647.5
Consumer
2,217.4
2,240.8
2,177.9
Total loans
20,400.0
20,148.2
17,327.7
Less allowance for loan losses
(182.9)
(177.0)
(172.5)
Total loans, net
20,217.1
19,971.2
17,155.2
Goodwill and other acquisition-related intangibles
2,174.2
2,151.2
1,962.0
Premises and equipment
339.6
363.1
325.1
Bank-owned life insurance
332.7
330.7
291.8
Other assets
690.1
661.4
706.7
Total assets
$ 27,567.9
$ 27,213.0
$ 25,037.1
Liabilities
Deposits:
Non-interest-bearing
$ 4,506.2
$ 4,217.5
$ 3,872.6
Savings, interest-bearing checking and money market
10,970.4
10,789.5
8,897.8
Time
5,339.2
5,479.7
5,162.7
Total deposits
20,815.8
20,486.7
17,933.1
Borrowings:
Retail repurchase agreements
497.2
519.8
472.2
Federal Home Loan Bank advances
332.4
333.4
509.3
Federal funds purchased and other borrowings
27.1
27.3
29.1
Total borrowings
856.7
880.5
1,010.6
Subordinated notes and debentures
159.6
159.4
182.2
Other liabilities
510.8
395.9
691.9
Total liabilities
22,342.9
21,922.5
19,817.8
Stockholders' Equity
Common stock
3.9
3.9
3.7
Additional paid-in capital
5,247.0
5,242.5
4,978.8
Retained earnings
744.1
757.7
772.6
Treasury stock, at cost
(493.5)
(497.3)
(248.9)
Accumulated other comprehensive loss (2)
(95.8)
(36.8)
(99.0)
Unallocated common stock of Employee Stock Ownership Plan, at cost
(180.7)
(179.5)
(187.9)
Total stockholders' equity
5,225.0
5,290.5
5,219.3
Total liabilities and stockholders' equity
$ 27,567.7
$ 27,213.0
$ 25,037.1
(1) Approximately $875 million of loans secured, in part, by owner-occupied commercial properties were reclassified
from commercial real estate loans to commercial loans as of March 31, 2011.
(2) The change from Sept. 30, 2011 to Dec. 31, 2011 reflects, in part, the after-tax change in the pension net
actuarial loss.
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)
2011
2011
2011
2011
2010
Interest and dividend income:
Commercial real estate (1)
$ 100.3
$ 98.0
$ 92.5
$ 101.6
$ 85.9
Commercial (1)
96.9
97.4
85.9
78.6
70.5
Residential mortgage
35.6
34.5
29.7
29.3
27.1
Consumer
21.2
21.5
20.6
20.9
22.1
Total interest on loans
254.0
251.4
228.7
230.4
205.6
Securities
17.3
21.7
23.4
21.0
13.6
Residential mortgage loans held for sale
0.7
0.4
0.3
0.7
0.7
Short-term investments
0.5
0.5
0.4
0.6
0.6
Securities purchased under agreements to resell
-
-
-
0.1
0.3
Total interest and dividend income
272.5
274.0
252.8
252.8
220.8
Interest expense:
Deposits
25.9
28.5
26.4
26.6
26.5
Borrowings
1.7
2.4
2.4
2.5
1.2
Subordinated notes and debentures
2.8
3.1
2.8
3.4
3.3
Total interest expense
30.4
34.0
31.6
32.5
31.0
Net interest income
242.1
240.0
221.2
220.3
189.8
Provision for loan losses
20.7
14.4
14.0
14.6
10.9
Net interest income after provision for loan losses
221.4
225.6
207.2
205.7
178.9
Non-interest income:
Bank service charges
31.6
35.8
32.9
31.0
30.7
Investment management fees
8.3
8.4
8.3
8.2
7.9
Insurance revenue
7.2
9.0
6.6
7.9
6.9
Brokerage commissions
2.6
2.8
3.3
3.2
2.9
Net gains on sales of residential mortgage loans
2.1
1.3
1.1
3.1
4.2
Net (losses) gains on sales of acquired loans
(0.4)
(4.8)
7.2
5.5
-
Bank-owned life insurance
1.7
2.0
1.4
1.2
1.0
Merchant services income, net
1.1
1.1
1.1
1.0
1.1
Net security gains (losses)
-
8.6
0.1
0.1
(1.0)
Other non-interest income
17.5
20.5
14.6
13.4
14.4
Total non-interest income
71.7
84.7
76.6
74.6
68.1
Non-interest expense:
Compensation and benefits
111.0
110.1
102.5
105.4
98.3
Occupancy and equipment
34.4
34.9
30.9
33.1
28.1
Professional and outside service fees
18.7
18.6
17.4
15.9
19.8
Amortization of other acquisition-related intangibles
7.0
7.0
6.0
5.9
6.1
Merger-related expenses
13.3
20.1
6.4
3.1
4.8
Other non-interest expense
45.8
41.2
43.8
39.4
42.0
Total non-interest expense (2)
230.2
231.9
207.0
202.8
199.1
Income before income tax expense
62.9
78.4
76.8
77.5
47.9
Income tax expense
19.9
25.5
25.6
25.8
15.9
Net income
$ 43.0
$ 52.9
$ 51.2
$ 51.7
$ 32.0
Basic and diluted earnings per common share
$ 0.12
$ 0.15
$ 0.15
$ 0.15
$ 0.09
(1) Approximately $875 million of loans secured, in part, by owner-occupied commercial properties were reclassified
from commercial real estate loans to commercial loans as of March 31, 2011.
(2) In addition to merger-related expenses, total non-interest expense includes $9.7 million, $1.4 million, $2.8 million
and $2.2 million of non-operating expenses for the three months ended Dec. 31, 2011, Sept. 30, 2011, June 30, 2011
and Dec. 31, 2010, respectively. See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Twelve Months Ended
December 31,
(in millions, except per share data)
2011
2010
Interest and dividend income:
Commercial real estate
$ 392.4
$ 312.1
Commercial
358.8
266.3
Residential mortgage
129.1
109.4
Consumer
84.2
89.6
Total interest on loans
964.5
777.4
Securities
83.4
43.5
Residential mortgage loans held for sale
2.1
2.4
Short-term investments
2.0
4.6
Securities purchased under agreements to resell
0.1
0.9
Total interest and dividend income
1,052.1
828.8
Interest expense:
Deposits
107.4
112.8
Borrowings
9.0
2.3
Subordinated notes and debentures
12.1
14.7
Total interest expense
128.5
129.8
Net interest income
923.6
699.0
Provision for loan losses
63.7
60.0
Net interest income after provision for loan losses
859.9
639.0
Non-interest income:
Bank service charges
131.3
126.3
Investment management fees
33.2
32.0
Insurance revenue
30.7
28.8
Brokerage commissions
11.9
11.3
Net gains on sales of residential mortgage loans
7.6
12.1
Net gains on sales of acquired loans
7.5
-
Bank-owned life insurance
6.3
6.7
Merchant services income, net
4.3
4.3
Net security gains (losses)
8.8
(1.0)
Other non-interest income
66.0
49.5
Total non-interest income
307.6
270.0
Non-interest expense:
Compensation and benefits
429.0
380.4
Occupancy and equipment
133.3
114.4
Professional and outside service fees
70.6
72.7
Amortization of other acquisition-related intangibles
25.9
21.7
Merger-related expenses
42.9
23.3
Other non-interest expense
170.2
169.5
Total non-interest expense (1)
871.9
782.0
Income before income tax expense
295.6
127.0
Income tax expense
96.8
41.3
Net income
$ 198.8
$ 85.7
Basic and diluted earnings per common share
$ 0.57
$ 0.24
(1) In addition to merger-related expenses, total non-interest expense includes $13.9 million and $35.6 million
of non-operating expenses for the twelve months ended Dec. 31, 2011 and 2010, respectively.
See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)
December 31, 2011
September 30, 2011
Three months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 853.9
$ 0.5
0.25%
$ 755.9
$ 0.5
0.29%
Securities purchased under
agreements to resell
-
-
-
-
-
-
Securities (2)
2,410.9
17.9
2.97
2,976.3
22.2
2.99
Residential mortgage loans held for sale
60.3
0.7
4.61
25.6
0.4
5.80
Loans:
Commercial real estate
7,114.9
100.3
5.64
7,157.0
98.0
5.48
Commercial
7,300.8
98.9
5.42
7,102.3
99.6
5.61
Residential mortgage
3,571.6
35.6
3.99
3,356.4
34.5
4.10
Consumer
2,230.1
21.2
3.80
2,240.7
21.5
3.84
Total loans
20,217.4
256.0
5.07
19,856.4
253.6
5.11
Total earning assets
23,542.5
$ 275.1
4.68%
23,614.2
$ 276.7
4.69%
Other assets
3,742.2
3,740.5
Total assets
$ 27,284.7
$ 27,354.7
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 4,330.6
$ -
- %
$ 4,094.5
$ -
- %
Savings, interest-bearing checking
and money market
10,841.4
12.4
0.46
10,642.9
14.1
0.53
Time
5,425.2
13.5
1.00
5,522.0
14.4
1.04
Total deposits
20,597.2
25.9
0.50
20,259.4
28.5
0.56
Borrowings:
Retail repurchase agreements
527.4
0.4
0.33
520.6
0.5
0.43
Federal Home Loan Bank advances
332.9
1.2
1.49
514.6
1.8
1.39
Federal funds purchased and
other borrowings
36.0
0.1
0.78
27.9
0.1
0.95
Total borrowings
896.3
1.7
0.78
1,063.1
2.4
0.91
Subordinated notes and debentures
159.5
2.8
7.02
176.0
3.1
6.86
Total funding liabilities
21,653.0
$ 30.4
0.56%
21,498.5
$ 34.0
0.63%
Other liabilities
330.2
341.0
Total liabilities
21,983.2
21,839.5
Stockholders' equity
5,301.5
5,515.2
Total liabilities and stockholders' equity
$ 27,284.7
$ 27,354.7
Net interest income/spread (3)
$ 244.7
4.12%
$ 242.7
4.06%
Net interest margin
4.16%
4.11%
(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 fully taxable equivalent ("FTE") adjustment was $2.6 million, $2.7 million and $0.9 million for the three months ended December 31, 2011, September 30, 2011 and December 31, 2010, respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)
December 31, 2010
Three months ended
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Assets:
Short-term investments
$ 814.7
$ 0.6
0.29%
Securities purchased under
agreements to resell
603.9
0.3
0.21
Securities (2)
2,456.7
13.6
2.22
Residential mortgage loans held for sale
51.7
0.7
5.75
Loans:
Commercial real estate
6,054.3
85.9
5.67
Commercial
5,086.5
71.4
5.62
Residential mortgage
2,459.9
27.1
4.41
Consumer
2,169.5
22.1
4.07
Total loans
15,770.2
206.5
5.24
Total earning assets
19,697.2
$ 221.7
4.50%
Other assets
3,263.3
Total assets
$ 22,960.5
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 3,633.5
$ -
- %
Savings, interest-bearing checking
and money market
8,249.0
11.5
0.56
Time
4,648.4
15.0
1.29
Total deposits
16,530.9
26.5
0.64
Borrowings:
Retail repurchase agreements
340.2
0.4
0.53
Federal Home Loan Bank advances
178.2
0.8
1.69
Federal funds purchased and
other borrowings
15.0
-
0.70
Total borrowings
533.4
1.2
0.92
Subordinated notes and debentures
171.3
3.3
7.75
Total funding liabilities
17,235.6
$ 31.0
0.72%
Other liabilities
390.0
Total liabilities
17,625.6
Stockholders' equity
5,334.9
Total liabilities and stockholders' equity
$ 22,960.5
Net interest income/spread (3)
$ 190.7
3.78%
Net interest margin
3.87%
(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 $2.6 million, $2.7 million and $0.9 million for the three months ended December 31, 2011,
September 30, 2011 and December 31, 2010, respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
December 31, 2011
December 31, 2010
Twelve months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 743.1
$ 2.0
0.28%
$ 1,725.0
$ 4.6
0.27%
Securities purchased under agreements to resell
27.3
0.1
0.17
456.2
0.9
0.20
Securities (1)
2,933.3
85.1
2.90
1,579.5
43.5
2.76
Residential mortgage loans held for sale
38.8
2.1
5.42
43.4
2.4
5.59
Loans:
Commercial real estate
6,971.8
392.4
5.63
5,594.8
312.1
5.58
Commercial
6,465.4
364.9
5.64
4,961.9
269.6
5.43
Residential mortgage
3,126.8
129.1
4.13
2,428.6
109.4
4.51
Consumer
2,190.1
84.2
3.85
2,199.2
89.6
4.07
Total loans
18,754.1
970.6
5.18
15,184.5
780.7
5.14
Total earning assets
22,496.6
$ 1,059.9
4.71%
18,988.6
$ 832.1
4.38%
Other assets
3,531.6
3,027.6
Total assets
$ 26,028.2
$ 22,016.2
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 4,032.8
$ -
- %
$ 3,426.0
$ -
- %
Savings, interest-bearing checking and money market
9,970.1
51.0
0.51
7,853.6
47.4
0.60
Time
5,276.6
56.4
1.07
4,533.5
65.4
1.44
Total deposits
19,279.5
107.4
0.56
15,813.1
112.8
0.71
Borrowings:
Retail repurchase agreements
486.6
2.0
0.41
209.2
1.0
0.48
Federal Home Loan Bank advances
456.1
6.7
1.48
52.3
1.1
2.22
Federal funds purchased and other borrowings
36.6
0.3
0.75
9.0
0.2
2.20
Total borrowings
979.3
9.0
0.92
270.5
2.3
0.88
Subordinated notes and debentures
170.4
12.1
7.08
179.6
14.7
8.17
Total funding liabilities
20,429.2
$ 128.5
0.63%
16,263.2
$ 129.8
0.80%
Other liabilities
327.7
384.7
Total liabilities
20,756.9
16,647.9
Stockholders' equity
5,271.3
5,368.3
Total liabilities and stockholders' equity
$ 26,028.2
$ 22,016.2
Net interest income/spread (2)
$ 931.4
4.08%
$ 702.3
3.58%
Net interest margin
4.14%
3.70%
(1) Average balances and yields for securities available for sale are based on amortized cost.
(2) The FTE adjustment was $7.8 million and $3.3 million for the twelve months ended December 31, 2011 and 2010,
respectively.
People's United Financial, Inc.
NON-PERFORMING ASSETS
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
Originated non-performing loans:
Commercial Banking:
Commercial real estate (1)
$ 106.7
$ 91.0
$ 90.2
$ 71.7
$ 82.5
Commercial and industrial (1)
59.2
49.2
54.1
48.9
38.2
Equipment financing
42.9
37.9
36.0
38.6
36.0
Total
208.8
178.1
180.3
159.2
156.7
Retail:
Residential mortgage
68.9
65.5
65.8
70.4
78.8
Home equity
15.8
14.2
12.3
10.5
9.1
Other consumer
0.3
0.5
0.4
0.4
0.6
Total
85.0
80.2
78.5
81.3
88.5
Total originated non-performing loans (2)
293.8
258.3
258.8
240.5
245.2
REO
26.8
27.7
33.5
38.1
39.8
Repossessed assets
16.1
19.2
23.1
13.5
18.1
Total non-performing assets
$ 336.7
$ 305.2
$ 315.4
$ 292.1
$ 303.1
Acquired non-performing loans (contractual amount) (3)
$ 249.0
$ 241.6
$ 250.4
$ 324.4
$ 359.8
Originated non-performing loans as a percentage
of originated loans
1.75%
1.60%
1.69%
1.62%
1.70%
Non-performing assets as a percentage of:
Originated loans, REO and repossessed assets
2.00
1.88
2.05
1.96
2.09
Tangible stockholders' equity and allowance for loan losses
10.44
9.20
9.21
8.63
8.84
(1) Non-performing commercial and industrial loans at March 31, 2011 include approximately $10.7 million of loans
secured, in part, by owner-occupied commercial properties that were previously classified as non-performing commercial
real estate loans.
(2) Reported net of government guarantees totaling $12.1 million at Dec. 31, 2011, $11.3 million at Sept. 30, 2011,
$10.7 million at June 30, 2011, $10.0 million at March 31, 2011 and $9.4 million at Dec. 31, 2010.
(3) Represents acquired loans that meet People's United Financial'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. Because acquired loans are initially recorded at an amount estimated to be collectible, losses on such
loans, when incurred, are first applied against the non-accretable difference established in purchase accounting and
then to any allowance for loan losses recognized subsequent to acquisition.
People's United Financial, Inc.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
Allowance for loan losses on originated loans:
Balance at beginning of period
$ 177.0
$ 176.0
$ 177.5
$ 172.5
$ 172.5
Charge-offs
(15.7)
(14.6)
(17.4)
(10.4)
(12.2)
Recoveries
0.9
1.2
1.9
0.8
1.3
Net loan charge-offs
(14.8)
(13.4)
(15.5)
(9.6)
(10.9)
Provision for loan losses
13.3
14.4
14.0
14.6
10.9
Balance at end of period
175.5
177.0
176.0
177.5
172.5
Allowance for loan losses on acquired loans:
Balance at beginning of period
-
-
-
-
-
Provision for loan losses
7.4
-
-
-
-
Balance at end of period
7.4
-
-
-
-
Total allowance for loan losses
$ 182.9
$ 177.0
$ 176.0
$ 177.5
$ 172.5
Allowance for loan losses on originated loans as a percentage of:
Originated loans
1.04%
1.09%
1.15%
1.19%
1.19%
Originated non-performing loans
59.7
68.5
68.0
73.8
70.3
Commercial banking allowance for loan losses as a percentage of
originated commercial banking loans
1.39
1.48
1.55
1.61
1.61
Retail allowance for loan losses as a percentage of
originated retail loans
0.29
0.26
0.25
0.26
0.25
NET LOAN CHARGE-OFFS
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
Commercial Banking:
Equipment financing
$ 4.5
$ 0.8
$ 2.3
$ 1.2
$ 3.0
Commercial real estate
3.9
4.6
9.3
3.3
2.6
Commercial and industrial
3.4
4.4
1.6
2.3
1.4
Total
11.8
9.8
13.2
6.8
7.0
Retail:
Residential mortgage
1.6
2.1
1.2
1.6
2.0
Home equity
0.7
1.1
0.8
0.8
1.1
Other consumer
0.7
0.4
0.3
0.4
0.8
Total
3.0
3.6
2.3
2.8
3.9
Total
$ 14.8
$ 13.4
$ 15.5
$ 9.6
$ 10.9
Net loan charge-offs to average loans (annualized)
0.29%
0.27%
0.35%
0.22%
0.28%
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 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 intangibles and certain purchase accounting-related 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 certain purchase accounting-related 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, charges
related to executive-level management separation costs, severance-related costs, and real estate asset writedowns,
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. 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 an infrequent 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, but are not limited to, 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.
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
Twelve Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
Dec. 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
2011
2010
Total non-interest expense
$ 230.2
$ 231.9
$ 207.0
$ 202.8
$ 199.1
$ 871.9
$ 782.0
Adjustments:
Amortization of:
Other acquisition-related intangibles
(7.0)
(7.0)
(6.0)
(5.9)
(6.1)
(25.9)
(21.7)
Purchase accounting-related
fair value adjustments (1)
(0.8)
(0.8)
(0.8)
(0.8)
(0.8)
(3.2)
(3.2)
Merger-related expenses
(13.3)
(20.1)
(6.4)
(3.1)
(4.8)
(42.9)
(23.3)
Severance-related costs
(3.9)
(1.4)
-
-
-
(5.3)
-
Executive-level separation costs
(1.0)
-
(2.8)
-
-
(3.8)
(15.3)
Real estate asset writedowns
(4.8)
-
-
-
-
(4.8)
-
Other (2)
(4.0)
(2.3)
(1.9)
(2.1)
(2.7)
(10.3)
(9.4)
Total
$ 195.4
$ 200.3
$ 189.1
$ 190.9
$ 184.7
$ 775.7
$ 709.1
Net interest income (FTE basis) (3)
$ 244.7
$ 242.7
$ 222.5
$ 221.5
$ 190.7
$ 931.4
$ 702.3
Total non-interest income
71.7
84.7
76.6
74.6
68.1
307.6
270.0
Total revenues
316.4
327.4
299.1
296.1
258.8
1,239.0
972.3
Adjustments:
BOLI FTE adjustment (3)
0.8
0.9
0.8
0.6
0.5
3.1
3.6
Purchase accounting-related
fair value adjustments (1)
(6.0)
(7.3)
(4.7)
(5.0)
(0.6)
(23.0)
3.0
Net security (gains) losses
-
(8.6)
(0.1)
(0.1)
1.0
(8.8)
1.0
Losses (gains) on sales of acquired loans
0.4
4.8
(7.2)
(5.5)
-
(7.5)
-
Other (4)
(0.1)
0.1
-
2.2
-
2.2
-
Total
$ 311.5
$ 317.3
$ 287.9
$ 288.3
$ 259.7
$ 1,205.0
$ 979.9
Efficiency ratio
62.7%
63.1%
65.7%
66.2%
71.1%
64.4%
72.4%
(1) Reflects the impact of amortization and accretion associated with certain purchase accounting-related fair value adjustments
recognized in connection with past business combinations. Amounts deducted from non-interest expense represent the impact of
adjustments made to acquired premises and equipment to reflect the fair value of such assets and which generally have a
remaining life of approximately 6 years at December31, 2011. Amounts added to (deducted from) total revenues represent the
impact of adjustments made to loans acquired prior to January1, 2010 and liabilities assumed (i.e. time deposits, FHLB
advances, repurchase agreements and subordinated notes and debentures) as a result of interest rate-related changes applicable
to such instruments and which generally have a weighted average remaining life of approximately 7 years at December31,
2011. These adjustments are made because management believes such income and expense amounts are not relevant for
purposes of evaluating operating efficiency.
(2) Items classified as ‘other’ and deducted from non-interest expense include, as applicable, certain franchise taxes, real estate
owned expenses and contract termination costs.
(3) Fully taxable equivalent.
(4) Items classified as ‘other’ and added to (deducted from) total revenues include, as applicable, asset write-offs, gains associated
with the sale of branch locations and mortgage servicing rights, and interest on an income tax refund.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING EARNINGS
Three Months Ended
Twelve Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
Dec. 31,
Dec. 31,
(dollars in millions, except per share data)
2011
2011
2011
2011
2010
2011
2010
Net income, as reported
$ 43.0
$ 52.9
$ 51.2
$ 51.7
$ 32.0
$ 198.8
$ 85.7
Adjustments to arrive at operating earnings:
Merger-related expenses
13.3
20.1
6.4
3.1
4.8
42.9
23.3
Severance-related costs
3.9
1.4
-
-
-
5.3
-
Executive-level separation costs
1.0
-
2.8
-
-
3.8
15.3
Real estate asset writedowns
4.8
-
-
-
-
4.8
-
Core system conversion costs
-
-
-
-
2.2
-
20.3
Total pre-tax adjustments
23.0
21.5
9.2
3.1
7.0
56.8
58.9
Tax effect
(7.3)
(7.1)
(3.1)
(1.0)
(2.3)
(18.5)
(19.2)
Total adjustments, net of tax
15.7
14.4
6.1
2.1
4.7
38.3
39.7
Operating earnings
$ 58.7
$ 67.3
$ 57.3
$ 53.8
$ 36.7
$ 237.1
$ 125.4
Earnings per share, as reported
$ 0.12
$ 0.15
$ 0.15
$ 0.15
$ 0.09
$ 0.57
$ 0.24
Adjustments to arrive at
operating earnings per share:
Merger-related expenses
0.03
0.04
0.02
-
0.01
0.09
0.04
Severance-related costs
0.01
-
-
-
-
0.01
-
Executive-level separation costs
-
-
-
-
-
-
0.04
Real estate asset writedowns
0.01
-
-
-
-
0.01
-
Core system conversion costs
-
-
-
-
-
-
0.03
Total adjustments per share
0.05
0.04
0.02
-
0.01
0.11
0.11
Operating earnings per share
$ 0.17
$ 0.19
$ 0.17
$ 0.15
$ 0.10
$ 0.68
$ 0.35
Average total assets
$ 27,285
$ 27,355
$ 24,853
$ 24,623
$ 22,961
$ 26,028
$ 22,016
Operating return on
average assets (annualized)
0.86%
0.98%
0.92%
0.87%
0.64%
0.91%
0.57%
OPERATING NET INTEREST MARGIN
Three Months Ended
Twelve Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
Dec. 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
2011
2010
Net interest income (FTE basis) (1)
$ 244.7
$ 242.7
$ 222.5
$ 221.5
$ 190.7
$ 931.4
$ 702.3
Adjustments to arrive at
operating net interest income:
Cost recovery income
(5.0)
-
-
-
-
(5.0)
-
Changes in accretable yield
-
-
(2.2)
(9.0)
-
(11.2)
-
Total adjustments
(5.0)
-
(2.2)
(9.0)
-
(16.2)
-
Operating net interest income
$ 239.7
$ 242.7
$ 220.3
$ 212.5
$ 190.7
$ 915.2
$ 702.3
Net interest margin, as reported (2)
4.16%
4.11%
4.13%
4.16%
3.87%
4.14%
3.70%
Adjustments to arrive at
operating net interest margin: (2)
Cost recovery income
(0.09)
-
-
-
-
(0.02)
-
Changes in accretable yield
-
-
(0.04)
(0.16)
-
(0.05)
-
Total adjustments
(0.09)
-
(0.04)
(0.16)
-
(0.07)
-
Operating net interest margin (2)
4.07%
4.11%
4.09%
4.00%
3.87%
4.07%
3.70%
Total earning assets
$ 23,542
$ 23,614
$ 21,564
$ 21,274
$ 19,697
$ 22,497
$ 18,989
(1) Fully taxable equivalent.
(2) Three month margins are annualized.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING RETURN ON AVERAGE TANGIBLE STOCKHOLDERS' EQUITY
Three Months Ended
Twelve Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
Dec. 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
2011
2010
Operating earnings
$ 58.7
$ 67.3
$ 57.3
$ 53.8
$ 36.7
$ 237.1
$ 125.4
Average stockholders' equity
$ 5,302
$ 5,515
$ 5,177
$ 5,185
$ 5,335
$ 5,271
$ 5,368
Less: Average goodwill and average other
acquisition-related intangibles
2,148
2,154
1,950
1,957
1,829
2,053
1,753
Average tangible stockholders' equity
$ 3,154
$ 3,361
$ 3,227
$ 3,228
$ 3,506
$ 3,218
$ 3,615
Operating return on average tangible
stockholders' equity (annualized)
7.4%
8.0%
7.1%
6.7%
4.2%
7.4%
3.5%
OPERATING DIVIDEND PAYOUT RATIO
Three Months Ended
Twelve Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
Dec. 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
2011
2010
Dividends paid
$ 54.8
$ 57.4
$ 54.5
$ 54.2
$ 55.2
$ 220.9
$ 218.1
Operating earnings
$ 58.7
$ 67.3
$ 57.3
$ 53.8
$ 36.7
$ 237.1
$ 125.4
Operating dividend payout ratio
93.4%
85.3%
95.1%
100.7%
150.4%
93.2%
173.9%
TANGIBLE EQUITY RATIO
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2011
2011
2011
2011
2010
Total stockholders' equity
$ 5,225
$ 5,291
$ 5,194
$ 5,160
$ 5,219
Less: Goodwill and other
acquisition-related intangibles
2,174
2,151
1,947
1,953
1,962
Tangible stockholders' equity
$ 3,051
$ 3,140
$ 3,247
$ 3,207
$ 3,257
Total assets
$ 27,568
$ 27,213
$ 25,323
$ 24,962
$ 25,037
Less: Goodwill and other
acquisition-related intangibles
2,174
2,151
1,947
1,953
1,962
Tangible assets
$ 25,394
$ 25,062
$ 23,376
$ 23,009
$ 23,075
Tangible equity ratio
12.0%
12.5%
13.9%
13.9%
14.1%
TANGIBLE BOOK VALUE PER SHARE
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(in millions, except per share data)
2011
2011
2011
2011
2010
Tangible stockholders' equity
$ 3,051
$ 3,140
$ 3,247
$ 3,207
$ 3,257
Common shares issued
395.42
395.46
377.02
376.95
376.62
Less: Shares classified as treasury shares
38.03
38.07
22.01
22.01
17.49
Unallocated ESOP shares
8.71
8.80
8.89
8.97
9.06
Common shares
348.68
348.59
346.12
345.97
350.07
Tangible book value per share
$ 8.75
$ 9.01
$ 9.38
$ 9.27
$ 9.30
SOURCE People's United Financial, Inc. BRIDGEPORT, Conn.,Jan. 19, 2012/PRNewswire/ --