People's United reports 2Q2021 net income of $170.8 million, to be acquired by M&T

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People's United reports 2Q2021 net income of $170.8 million, to be acquired by M&T

Thu, 07/15/2021 - 5:10pm -- tim
  • Operating Earnings of $0.41 per Common Share
  • Shareholder approval received for the announced merger with M&T Bank Corporation.
  • Return on average assets of 1.07 percent, or 1.10 percent on an operating basis, and return on average tangible common equity of 14.7 percent, or 15.4 percent on an operating basis.
  • Asset quality remained excellent as evidenced by net loan charge-offs to average total loans of 10 basis points, and provision for credit losses on loans resulting in a net benefit of $40.7 million.
  • Non-interest income increased 5 percent linked-quarter and 10 percent year-over-year driven by broad-based growth.

Vermont Business Magazine People's United Financial, Inc. (NASDAQ: PBCT) today reported results for the second quarter of 2021. These results along with comparison periods are summarized below.

"We are pleased with the overwhelming shareholder approval received during the quarter for the announced merger with M&T," said Jack Barnes, Chairman and Chief Executive Officer. "The vote reflects investor confidence in the value of merging two market-leading financial institutions, and in the ability of the combined company to better serve clients across some of the most populated and attractive banking markets in the nation. While preparations for the transaction's close and integration move forward, our most important objective remains servicing the needs of customers, communities, and colleagues. Looking to the future, we are excited about executing on the growth opportunities ahead and building upon the extraordinary legacy of People's United."

M&T from Buffalo and Bridgeport, CT-based People's each received the necessary shareholder approvals for the consummation of the merger of People's United into M&T in May. Based on stock prices when the deal was announced in February 2021, the all-stock acquisition is valued at approximately $7.6 billion. People's acquired Burlington-based Chittenden Corp in 2008 for $1.8 billion. People's United Bank has branches across Vermont.

The merger is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

The combined company will create the 11th largest bank in the United States, based on assets of approximately $200 billion, spanning 12 states from Maine to Virginia and the District of Columbia and with a network of more than 1,100 branches and over 2,000 ATMs.

Also today, People's United announced that its Board of Directors declared a quarterly cash dividend of $0.3515625 per share on the Company's Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock. The dividend is payable on September 15, 2021 to shareholders of record at the close of business on September 1, 2021.


M&T to acquire People's United Bank in $7.6 billion deal


 

($ in millions, except per common share data)

       
     

 Three Months Ended

     

Jun. 30, 2021

 

Mar. 31, 2021

 

Jun. 30, 2020

               

Net income

 

$         170.8

 

$         144.5

 

$           89.9

Net income available

 

167.3

 

141.0

 

86.4

 

to common shareholders

     
 

Per common share

 

0.39

 

0.33

 

0.21

               

Operating earnings1

 

176.1

 

156.5

 

101.0

 

Per common share

 

0.41

 

0.37

 

0.24

               
               

Net interest income

 

$         380.9

 

$         385.9

 

$         405.6

 

Net interest margin

 

2.70%

 

2.74%

 

3.05%

               

Non-interest income

 

99.0

 

94.6

 

89.6

               
               

Non-interest expense

 

$         305.0

 

$         311.9

 

$         304.0

Operating non-interest expense1

293.8

 

292.3

 

285.5

               

Efficiency ratio

 

57.4%

 

56.6%

 

53.5%

               
               

Average balances

           

Loans

 

$       41,683

 

$       42,854

 

$       45,153

Deposits

 

53,041

 

52,876

 

48,447

               

Period-end balances

           

Loans

 

41,366

 

42,770

 

45,452

Deposits

 

52,581

 

53,475

 

49,934

               

1See Non-GAAP Financial Measures and Reconciliation to GAAP.

   

"We are pleased with the overwhelming shareholder approval received during the quarter for the announced merger with M&T," said Jack Barnes, Chairman and Chief Executive Officer. "The vote reflects investor confidence in the value of merging two market-leading financial institutions, and in the ability of the combined company to better serve clients across some of the most populated and attractive banking markets in the nation. While preparations for the transaction's close and integration move forward, our most important objective remains servicing the needs of customers, communities, and colleagues. Looking to the future, we are excited about executing on the growth opportunities ahead and building upon the extraordinary legacy of People's United."

"We delivered another quarter of strong financial performance," stated David Rosato, Senior Executive Vice President and Chief Financial Officer. "Record quarterly operating income of $176.1 million, increased 12.5 percent linked-quarter and generated an operating return on average tangible equity of 15.4 percent. These results, which further highlight the strengths of the franchise, included higher fee revenues, well-controlled expenses, and a negative provision for credit losses primarily driven by further improvements in the economic outlook.  The growth in fee revenues was broad-based with notable increases in swap income, and our wealth and cash management businesses. We are pleased with our ability to hold net interest margin relatively steady for the quarter considering the current economic environment. The margin of 2.70 percent was only four basis points below the first quarter as the unfavorable impact of lower yields in the securities portfolio and increased excess liquidity was largely offset by a reduction in deposit costs for the eighth consecutive quarter, an additional calendar day and continued stable loan yields."

Rosato continued, "Period-end loans and deposits decreased three percent and two percent, respectively, from the close of the first quarter. The $1.4 billion decline in period-end loans was driven by the forgiveness of $970 million in PPP balances, $530 million in lower retail balances, and a $130 million reduction in mortgage warehouse. Conversely, the loan portfolio benefited from strong results in our specialized industry verticals within C&I and LEAF. The $894 million decline in period-end deposits was equally attributable to lower brokered deposit balances and seasonal outflows in our municipal business. Importantly, non-interest-bearing deposits continued to grow, up three percent linked-quarter and now account for 32 percent of total period-end balances. Finally, capital ratios remain strong and improved linked-quarter for both the Bank and Holding Company."

               
     

 As of and for the Three Months Ended

     

Jun. 30, 2021

 

Mar. 31, 2021

 

Jun. 30, 2020

               

Asset Quality

           
               

Net loan charge-offs 
  to average total loans

 

0.10%

 

0.12%

 

0.08%

Non-performing loans
  as a percentage of total loans

 

0.79%

 

0.83%

 

0.65%

               
               

Returns

           

Return on average assets1

 

1.07%

 

0.90%

 

0.58%

Return on average tangible common equity1

 

14.7%

 

12.5%

 

8.1%

               
               

Capital Ratios

           

People's United Financial, Inc.

           

Tangible common equity / tangible assets

 

7.7%

 

7.4%

 

7.3%

Tier 1 leverage

 

8.4%

 

8.3%

 

8.0%

Common equity tier 1 

 

11.3%

 

11.0%

 

9.8%

Tier 1 risk-based

 

11.8%

 

11.6%

 

10.3%

Total risk-based 

 

13.1%

 

12.9%

 

11.8%

               

People's United Bank, N.A.

           

Tier 1 leverage

   

8.8%

 

8.7%

 

8.5%

Common equity tier 1 

   

12.3%

 

12.2%

 

10.9%

Tier 1 risk-based

   

12.3%

 

12.2%

 

10.9%

Total risk-based 

   

13.5%

 

13.5%

 

12.3%

               

1See Non-GAAP Financial Measures and Reconciliation to GAAP.

       

The Board of Directors declared a $0.1825 per common share quarterly dividend payable August 15, 2021 to shareholders of record on August 1, 2021. Based on the closing stock price on July 14, 2021, the dividend yield on People's United Financial common stock is 4.4 percent.

People's United Bank, N.A. is a subsidiary of People's United Financial, Inc., a diversified, community-focused financial services company headquartered in the Northeast with over $63 billion in assets. Founded in 1842, People's United Bank offers commercial and retail banking through a network of more than 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine, as well as wealth management solutions. The company also provides specialized commercial services to customers nationwide.

2Q 2021 Financial Highlights

Summary

  • Net income totaled $170.8 million, or $0.39 per common share.
    • Net income available to common shareholders totaled $167.3 million.
    • Operating earnings totaled $176.1 million, or $0.41 per common share (See Non-GAAP Financial Measures and Reconciliation to GAAP).
  • Net interest income totaled $380.9 million in 2Q21 compared to $385.9 million in 1Q21.
    • Includes $24.9 million associated with PPP loans in 2Q21 ($20.0 million in net fees and $4.9 million in net interest income).
  • Net interest margin decreased four basis points from 1Q21 to 2.70% reflecting:
    • Lower rates on deposits (increase of four basis points).
    • One additional calendar day in 2Q21 (increase of two basis points).
    • Lower yields on the securities portfolio (decrease of six basis points).
    • Lower yields on the loan portfolio (decrease of four basis points).
    • Excess liquidity resulting from deposits at the Federal Reserve Bank (decrease of two basis points).
    • PPP loans had a seven basis point favorable impact on the net interest margin in 2Q21.
  • Provision for credit losses on loans totaled $(40.7) million.
    • Allowance for credit losses on loans decreased $51.0 million.
    • Net loan charge-offs totaled $10.3 million.
    • Net loan charge-off ratio of 0.10%.
  • Non-interest income totaled $99.0 million in 2Q21 compared to $94.6 million in 1Q21.
    • Customer interest rate swap income increased $2.3 million.
    • Investment management fees increased $1.6 million.
    • Bank service charges increased $1.4 million.
    • At June 30, 2021, assets under discretionary management totaled $10.1 billion.
  • Non-interest expense totaled $305.0 million in 2Q21 compared to $311.9 million in 1Q21.
    • Operating non-interest expense totaled $293.8 million in 2Q21 and $292.3 million in 1Q21 (See Non-GAAP Financial Measures and Reconciliation to GAAP).
    • Compensation and benefits expense increased $4.8 million, primarily reflecting higher incentive-related accruals offset by lower payroll costs in 2Q21.
    • Amortization of other acquisition-related intangible assets decreased $2.2 million.
    • Professional and outside services expense, excluding $6.0 million and $9.4 million of non-operating expenses in 2Q21 and 1Q21, respectively, decreased $0.2 million.
    • Other non-interest expense includes non-operating expenses totaling $5.0 million in 2Q21 and $10.1 million in 1Q21.
    • The efficiency ratio was 57.4% for 2Q21 compared to 56.6% for 1Q21 and 53.5% for 2Q20 (See Non-GAAP Financial Measures and Reconciliation to GAAP).
  • The effective income tax rate was 20.8% for both 2Q21 and the first six months of 2021, compared to 37.0% for the full-year of 2020.
    • The full-year 2020 effective income tax rate reflects the impact of a non-deductible goodwill impairment charge for which no tax benefit was realized. Excluding non-deductible goodwill impairment, the effective income tax rate was 18.4% for the full-year of 2020.

Commercial Banking

  • Commercial loans totaled $31.9 billion at June 30, 2021, an $874 million decrease from March 31, 2021.
    • PPP loans decreased $884 million ($86 million in initial funding less $970 million in loan forgiveness).
    • The mortgage warehouse portfolio decreased $130 million.
    • The New York multifamily portfolio decreased $62 million.
    • The equipment financing portfolio increased $64 million.
  • Average commercial loans totaled $31.9 billion in 2Q21, a $550 million decrease from 1Q21.
    • The average mortgage warehouse portfolio decreased $349 million.
    • Average PPP loans decreased $160 million.
    • The average New York multifamily portfolio decreased $49 million.
    • The average equipment financing portfolio increased $46 million.
  • Commercial deposits totaled $24.9 billion at June 30, 2021 compared to $23.3 billion at March 31, 2021.
  • The ratio of non-accrual commercial loans to total commercial loans was 0.82% at June 30, 2021 compared to 0.85% at March 31, 2021.
  • Non-performing commercial assets totaled $269.2 million at June 30, 2021 compared to $286.1 million at March 31, 2021.
  • For the commercial loan portfolio, the allowance for credit losses as a percentage of commercial loans was 0.76% at June 30, 2021 compared to 0.77% at March 31, 2021.
  • The commercial allowance for credit losses represented 93% of non-accrual commercial loans at June 30, 2021 compared to 90% at March 31, 2021.

Retail Banking

  • Residential mortgage loans totaled $7.6 billion at June 30, 2021, a $441 million decrease from March 31, 2021.
    • Average residential mortgage loans totaled $7.8 billion in 2Q21, a $500 million decrease from 1Q21.
  • Home equity loans totaled $1.8 billion at June 30, 2021, an $84 million decrease from March 30, 2021.
    • Average home equity loans totaled $1.8 billion in 2Q21, a $112 million decrease from 1Q21.
  • Retail deposits totaled $27.7 billion at June 30, 2021 compared to $30.2 billion at March 31, 2021.
  • The ratio of non-accrual residential mortgage loans to residential mortgage loans was 0.65% at June 30, 2021 compared to 0.71% at March 31, 2021.
  • The ratio of non-accrual home equity loans to home equity loans was 1.01% at June 30, 2021 compared to 1.00% at March 31, 2021.
  • For the retail loan portfolio, the allowance for credit losses as a percentage of retail loans was 1.13% at June 30, 2021 compared to 1.48% at March 31, 2021.
  • The retail allowance for credit losses represented 158% of non-accrual retail loans at June 30, 2021 compared to 195% at March 31, 2021.

Access Information About People's United Financial at www.peoples.com.

People's United Financial, Inc.

                     

FINANCIAL HIGHLIGHTS

                     
                       
   

 

As of and for the Three Months Ended

 
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

(dollars in millions, except per common share data)

 

2021

 

2021

 

2020

 

2020

 

2020

 

Earnings Data:

                     

  Net interest income (fully taxable equivalent)

$

388.7

$

393.5

$

390.2

$

398.7

$

413.0

 

  Net interest income 

 

380.9

 

385.9

 

382.8

 

391.4

 

405.6

 

  Provision for credit losses

 

(40.8)

 

(13.6)

 

14.7

 

26.8

 

80.8

 

  Non-interest income (1)

 

99.0

 

94.6

 

178.2

 

101.1

 

89.6

 

  Non-interest expense (1)

 

305.0

 

311.9

 

646.4

 

293.6

 

304.0

 

  Income (loss) before income tax expense

 

215.7

 

182.2

 

(100.1)

 

172.1

 

110.4

 

  Net income (loss)

 

170.8

 

144.5

 

(145.3)

 

144.6

 

89.9

 

  Net income (loss) available to common shareholders (1)

 

167.3

 

141.0

 

(148.8)

 

141.1

 

86.4

 
                       

Selected Statistical Data:

                     

  Net interest margin (2)

 

2.70

%

2.74

%

2.84

%

2.97

%

3.05

%

  Return on average assets (1), (2)

 

1.07

 

0.90

 

(0.93)

 

0.94

 

0.58

 

  Return on average common equity (2)

 

9.1

 

7.7

 

(7.8)

 

7.5

 

4.6

 

  Return on average tangible common equity (1), (2)

 

14.7

 

12.5

 

(13.4)

 

13.1

 

8.1

 

  Efficiency ratio (1)

 

57.4

 

56.6

 

55.5

 

53.8

 

53.5

 
                       

Common Share Data:

                     

  Earnings (loss) per common share: 

                     

    Basic

$

0.40

$

0.34

$

(0.36)

$

0.34

$

0.21

 

    Diluted (1)

 

0.39

 

0.33

 

(0.35)

 

0.34

 

0.21

 

  Dividends paid per common share

 

0.1825

 

0.1800

 

0.1800

 

0.1800

 

0.1800

 

  Common dividend payout ratio (1)

 

46.2

%

53.7

%

(50.8)

%

53.6

%

87.4

%

  Book value per common share

$

17.77

$

17.42

$

17.56

$

18.11

$

17.95

 

  Tangible book value per common share (1)

 

11.08

 

10.70

 

10.77

 

10.37

 

10.18

 

  Stock price:

                     

    High

 

19.62

 

19.40

 

13.58

 

12.36

 

13.99

 

    Low

 

16.75

 

12.66

 

9.98

 

9.74

 

9.37

 

    Close

 

17.14

 

17.90

 

12.93

 

10.31

 

11.57

 

  Common shares outstanding (in millions) (1)

 

427.77

 

427.22

 

424.68

 

424.67

 

424.59

 

  Weighted average diluted common shares (in millions)

 

425.08

 

422.58

 

420.39

 

420.29

 

420.15

 
                       

(1) See Non-GAAP Financial Measures and Reconciliation to GAAP.

                     

(2) Annualized.

                     

People's United Financial, Inc.

         

FINANCIAL HIGHLIGHTS

         
           
     

As of and for the

   
     

Six Months Ended

   
     

June 30,

   

(dollars in millions, except per common share data)

 

2021

 

2020

 

Earnings Data:

         

  Net interest income (fully taxable equivalent)

$

782.2

$

816.7

 

  Net interest income 

 

766.8

 

801.6

 

  Provision for credit losses

 

(54.4)

 

114.3

 

  Non-interest income

 

193.6

 

213.4

 

  Non-interest expense (1)

 

616.9

 

624.1

 

  Income before income tax expense

 

397.9

 

276.6

 

  Net income

 

315.3

 

220.3

 

  Net income available to common shareholders (1)

 

308.3

 

213.3

 
           

Selected Statistical Data:

         

  Net interest margin (2)

 

2.72

%

3.08

%

  Return on average assets (1), (2)

 

0.99

 

0.73

 

  Return on average common equity (2)

 

8.4

 

5.7

 

  Return on average tangible common equity (1), (2)

 

13.6

 

10.0

 

  Efficiency ratio (1)

 

57.0

 

53.7

 
           

Common Share Data:

         

  Earnings per common share: 

         

    Basic

$

0.73

$

0.50

 

    Diluted (1)

 

0.73

 

0.50

 

  Dividends paid per common share

 

0.3625

 

0.3575

 

  Common dividend payout ratio (1)

 

49.6

%

71.7

%

  Book value per common share

$

17.77

$

17.95

 

  Tangible book value per common share (1)

 

11.08

 

10.18

 

  Stock price:

         

    High

 

19.62

 

17.00

 

    Low

 

12.66

 

9.37

 

    Close

 

17.14

 

11.57

 

  Common shares oustanding (in millions) (1)

 

427.77

 

424.59

 

  Weighted average diluted common shares (in millions)

 

423.91

 

424.82

 
           

(1) See Non-GAAP Financial Measures and Reconciliation to GAAP.

         

(2) Annualized.

         

People's United Financial, Inc.

                     

FINANCIAL HIGHLIGHTS - Continued

                     
                       
   

 

As of and for the Three Months Ended

 
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

Financial Condition Data:

                     

    Total assets

$

63,341

$

64,172

$

63,092

$

60,871

$

61,510

 

    Loans 

 

41,366

 

42,770

 

43,870

 

45,231

 

45,452

 

    Securities

 

10,597

 

10,445

 

9,191

 

8,270

 

8,233

 

    Short-term investments

 

5,249

 

4,992

 

3,766

 

439

 

987

 

    Allowance for credit losses on loans

 

348

 

399

 

425

 

424

 

414

 

    Goodwill and other acquisition-related intangible assets

 

2,826

 

2,835

 

2,846

 

3,244

 

3,254

 

    Deposits

 

52,581

 

53,475

 

52,138

 

49,637

 

49,934

 

    Borrowings

 

952

 

1,156

 

1,148

 

1,237

 

1,782

 

    Notes and debentures

 

1,002

 

1,003

 

1,010

 

1,012

 

1,015

 

    Stockholders' equity

 

7,750

 

7,592

 

7,603

 

7,831

 

7,763

 

    Total risk-weighted assets (1):

                     

       People's United Financial, Inc.

 

43,656

 

43,833

 

45,075

 

45,756

 

45,657

 

       People's United Bank, N.A.

 

43,625

 

43,812

 

45,016

 

45,685

 

45,615

 

    Non-accrual loans

 

328

 

353

 

329

 

306

 

296

 

    Net loan charge-offs

 

10.3

 

12.4

 

13.4

 

17.3

 

8.5

 
                       

Average Balances:

                     

    Loans

$

41,683

$

42,854

$

44,061

$

44,853

$

45,153

 

    Securities (2)

 

10,418

 

9,561

 

8,390

 

7,922

 

8,240

 

    Short-term investments

 

5,469

 

5,000

 

2,582

 

842

 

774

 

    Total earning assets

 

57,570

 

57,415

 

55,034

 

53,617

 

54,168

 

    Total assets

 

63,930

 

64,057

 

62,396

 

61,293

 

61,841

 

    Deposits

 

53,041

 

52,876

 

50,674

 

49,542

 

48,447

 

    Borrowings

 

1,012

 

1,143

 

1,233

 

1,283

 

2,911

 

    Notes and debentures

 

1,003

 

1,008

 

1,011

 

1,014

 

1,014

 

    Total funding liabilities

 

55,056

 

55,027

 

52,918

 

51,839

 

52,372

 

    Stockholders' equity

 

7,634

 

7,606

 

7,884

 

7,801

 

7,757

 
                       

Ratios:

                     

    Net loan charge-offs to average total loans (annualized)

 

0.10

%

0.12

%

0.12

%

0.15

%

0.08

%

    Non-performing assets to total loans, real estate owned

                     

      and repossessed assets

 

0.82

 

0.85

 

0.78

 

0.71

 

0.69

 

    Allowance for credit losses on loans to:

                     

      Total loans

 

0.84

 

0.93

 

0.97

 

0.94

 

0.91

 

      Non-accrual loans

 

106.1

 

113.0

 

129.1

 

138.4

 

139.8

 

    Average stockholders' equity to average total assets

 

11.9

 

11.9

 

12.6

 

12.7

 

12.5

 

    Stockholders' equity to total assets

 

12.2

 

11.8

 

12.1

 

12.9

 

12.6

 

    Tangible common equity to tangible assets (3)

 

7.7

 

7.4

 

7.5

 

7.5

 

7.3

 

    Total risk-based capital (1):

                     

       People's United Financial, Inc.

 

13.1

 

12.9

 

12.4

 

11.8

 

11.8

 

       People's United Bank, N.A.

 

13.5

 

13.5

 

12.8

 

12.3

 

12.3

 
                       

(1) June 30, 2021 amounts and ratios are preliminary.

                     

(2) Average balances for securities are based on amortized cost.

                     

(3) See Non-GAAP Financial Measures and Reconciliation to GAAP.

                     

People's United Financial, Inc.

   

CONSOLIDATED STATEMENTS OF CONDITION 

       
         
 

June 30, 

March 31, 

Dec. 31,

June 30, 

(in millions)

2021

2021

2020

2020

Assets

       

Cash and due from banks

$        516.3

$        464.2

$        477.3

$        491.9

Short-term investments

5,249.4

4,992.1

3,766.0

987.4

Securities:

       

  Debt securities available-for-sale, at fair value 

6,328.6

6,160.6

4,925.5

4,080.3

  Debt securities held-to-maturity, at amortized cost

4,003.1

4,016.8

3,993.8

3,848.6

  Federal Reserve Bank and Federal Home Loan Bank stock, at cost

264.9

266.2

266.6

298.3

  Equity securities, at fair value

-

1.5

5.3

5.8

    Total securities

10,596.6

10,445.1

9,191.2

8,233.0

Loans held-for-sale

5.4

10.1

26.5

12.2

Loans: 

       

  Commercial and industrial (1)

13,627.4

14,288.2

14,982.3

13,999.5

  Commercial real estate (1)

13,243.2

13,520.1

13,336.9

14,593.9

  Equipment financing

4,990.9

4,927.2

4,930.0

4,880.1

    Total Commercial Portfolio

31,861.5

32,735.5

33,249.2

33,473.5

  Residential mortgage

7,626.2

8,067.2

8,518.9

9,623.7

  Home equity and other consumer

1,877.9

1,967.0

2,101.4

2,354.3

    Total Retail Portfolio

9,504.1

10,034.2

10,620.3

11,978.0

    Total loans

41,365.6

42,769.7

43,869.5

45,451.5

  Less allowance for credit losses on loans

(348.1)

(399.1)

(425.1)

(414.0)

    Total loans, net

41,017.5

42,370.6

43,444.4

45,037.5

Goodwill and other acquisition-related intangible assets

2,825.8

2,834.6

2,845.9

3,253.7

Bank-owned life insurance

713.7

713.1

711.6

708.1

Premises and equipment, net

261.8

269.5

276.7

285.7

Other assets

2,154.2

2,073.2

2,352.2

2,500.2

    Total assets

$  63,340.7

$  64,172.5

$  63,091.8

$  61,509.7

         

Liabilities

       

Deposits: 

       

  Non-interest-bearing

$  16,722.8

$  16,266.5

$  15,881.7

$  13,656.9

  Savings

6,710.2

6,517.7

6,029.7

5,759.4

  Interest-bearing checking and money market

24,705.9

25,782.8

24,567.5

22,943.6

  Time

4,442.3

4,908.3

5,658.8

7,574.4

    Total deposits

52,581.2

53,475.3

52,137.7

49,934.3

Borrowings:

       

  Federal Home Loan Bank advances

569.7

569.7

569.7

1,289.7

  Customer repurchase agreements

382.5

436.2

452.9

342.1

  Federal funds purchased

-

150.0

125.0

150.0

    Total borrowings

952.2

1,155.9

1,147.6

1,781.8

Notes and debentures

1,001.6

1,003.3

1,009.6

1,014.5

Other liabilities

1,056.1

945.8

1,194.1

1,016.1

    Total liabilities

55,591.1

56,580.3

55,489.0

53,746.7

         

Stockholders' Equity

       

Preferred stock

244.1

244.1

244.1

244.1

Common stock

5.4

5.4

5.3

5.3

Additional paid-in capital 

7,709.4

7,693.9

7,663.6

7,651.2

Retained earnings

1,516.5

1,426.9

1,363.6

1,524.6

Unallocated common stock of ESOP, at cost

(112.0)

(113.8)

(115.6)

(119.3)

Accumulated other comprehensive loss

(144.8)

(195.3)

(89.2)

(73.9)

Treasury stock, at cost

(1,469.0)

(1,469.0)

(1,469.0)

(1,469.0)

    Total stockholders' equity

7,749.6

7,592.2

7,602.8

7,763.0

    Total liabilities and stockholders' equity

$  63,340.7

$  64,172.5

$  63,091.8

$  61,509.7

         

(1) In the first quarter of 2021, the Company completed a portfolio review to ensure consistent classification of certain

       

     commercial loans across the Company's franchise and conformity to industry practice for such loans. As a result,

       

     approximately $350 million of loans secured by non-owner-occupied commercial properties were prospectively

       

     reclassified, in March 2021, from commercial and industrial loans to commercial real estate loans. Prior period

       

     balances were not restated to conform to the current presentation. 

       

People's United Financial, Inc.

                 

CONSOLIDATED STATEMENTS OF INCOME 

                 
                   
   

 

Three Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

(in millions, except per common share data)

2021

 

2021

 

2020

 

2020

 

2020

Interest and dividend income:

                 

  Commercial and industrial

$  107.9

 

$     116.1

 

$   111.3

 

$  110.7

 

$  112.4

  Commercial real estate

101.6

 

98.8

 

106.1

 

110.5

 

122.4

  Equipment financing

62.5

 

62.8

 

62.1

 

65.4

 

67.6

  Residential mortgage

64.4

 

69.9

 

74.9

 

82.1

 

84.8

  Home equity and other consumer

16.2

 

16.5

 

18.7

 

19.9

 

20.1

    Total interest on loans

352.6

 

364.1

 

373.1

 

388.6

 

407.3

  Securities

52.4

 

51.4

 

47.2

 

47.5

 

49.8

  Short-term investments

1.3

 

1.2

 

0.8

 

0.4

 

0.2

  Loans held-for-sale

-

 

0.3

 

0.4

 

0.3

 

0.3

    Total interest and dividend income

406.3

 

417.0

 

421.5

 

436.8

 

457.6

Interest expense:

                 

  Deposits 

17.1

 

22.7

 

30.1

 

36.5

 

41.7

  Borrowings 

1.1

 

1.2

 

1.3

 

1.5

 

2.0

  Notes and debentures

7.2

 

7.2

 

7.3

 

7.4

 

8.3

    Total interest expense

25.4

 

31.1

 

38.7

 

45.4

 

52.0

    Net interest income

380.9

 

385.9

 

382.8

 

391.4

 

405.6

Provision for credit losses on loans 

(40.7)

 

(13.6)

 

14.7

 

27.1

 

80.8

Provision for credit losses on securities 

(0.1)

 

-

 

-

 

(0.3)

 

-

    Net interest income after provision for credit losses

421.7

 

399.5

 

368.1

 

364.6

 

324.8

Non-interest income:

                 

  Bank service charges

24.9

 

23.5

 

24.7

 

24.5

 

20.3

  Investment management fees

21.5

 

19.9

 

18.9

 

18.8

 

17.4

  Commercial banking lending fees

14.1

 

13.6

 

15.5

 

12.7

 

10.6

  Operating lease income

11.2

 

11.3

 

12.9

 

12.4

 

11.8

  Cash management fees

9.6

 

9.2

 

9.1

 

8.8

 

8.1

  Customer interest rate swap income, net

2.4

 

0.1

 

2.2

 

1.2

 

2.7

  Gain on sale of business, net of expenses (1)

-

 

-

 

75.9

 

-

 

-

  Other non-interest income

15.3

 

17.0

 

19.0

 

22.7

 

18.7

    Total non-interest income

99.0

 

94.6

 

178.2

 

101.1

 

89.6

Non-interest expense:

                 

  Compensation and benefits 

177.6

 

172.8

 

166.6

 

166.5

 

167.8

  Occupancy and equipment 

50.0

 

49.1

 

50.9

 

49.1

 

48.0

  Professional and outside services

30.0

 

33.6

 

24.9

 

24.1

 

25.7

  Amortization of other acquisition-related intangible assets

8.8

 

11.0

 

9.7

 

10.2

 

10.2

  Regulatory assessments

7.8

 

8.1

 

6.9

 

8.4

 

8.7

  Operating lease expense

7.6

 

7.8

 

8.5

 

9.3

 

8.8

  Goodwill impairment

-

 

-

 

353.0

 

-

 

-

  Other non-interest expense 

23.2

 

29.5

 

25.9

 

26.0

 

34.8

    Total non-interest expense (1)

305.0

 

311.9

 

646.4

 

293.6

 

304.0

    Income (loss) before income tax expense

215.7

 

182.2

 

(100.1)

 

172.1

 

110.4

Income tax expense

44.9

 

37.7

 

45.2

 

27.5

 

20.5

    Net income (loss)

170.8

 

144.5

 

(145.3)

 

144.6

 

89.9

Preferred stock dividend

3.5

 

3.5

 

3.5

 

3.5

 

3.5

    Net income (loss) available to common shareholders

$  167.3

 

$     141.0

 

$    (148.8)

 

$  141.1

 

$     86.4

                   

Earnings (loss) per common share:

                 

  Basic

$    0.40

 

$       0.34

 

$     (0.36)

 

$     0.34

 

$     0.21

  Diluted

0.39

 

0.33

 

(0.35)

 

0.34

 

0.21

                   

(1) The gain on sale of business, net of expenses, is considered non-operating income. Total non-interest expense includes 
     $11.2 million, $19.6 million,$357.9 million, $4.6 million and $18.5 million of non-operating expenses for the three months ended
     June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.  See Non-GAAP
     Financial Measures and Reconciliation to GAAP.

                 

People's United Financial, Inc.

     

CONSOLIDATED STATEMENTS OF INCOME

     
       
   

Six Months Ended

 
   

June 30,

 

(in millions, except per common share data)

2021

 

2020

Interest and dividend income:

     

  Commercial and industrial

$  224.0

 

$  218.8

  Commercial real estate

200.4

 

272.0

  Equipment financing

125.3

 

135.8

  Residential mortgage

134.3

 

175.2

  Home equity and other consumer

32.7

 

48.1

    Total interest on loans

716.7

 

849.9

  Securities

103.8

 

101.0

  Short-term investments

2.5

 

2.2

  Loans held-for-sale

0.3

 

3.6

    Total interest and dividend income

823.3

 

956.7

Interest expense:

     

  Deposits 

39.8

 

120.6

  Borrowings 

2.3

 

17.4

  Notes and debentures

14.4

 

17.1

    Total interest expense

56.5

 

155.1

    Net interest income

766.8

 

801.6

Provision for credit losses on loans 

(54.3)

 

114.3

Provision for credit losses on securities 

(0.1)

 

-

    Net interest income after provision for credit losses

821.2

 

687.3

Non-interest income:

     

  Bank service charges

48.4

 

48.3

  Investment management fees

41.4

 

35.5

  Commercial banking lending fees

27.7

 

22.7

  Operating lease income

22.5

 

24.4

  Cash management fees

18.8

 

15.5

  Customer interest rate swap income, net

2.5

 

11.5

  Other non-interest income

32.3

 

55.5

    Total non-interest income

193.6

 

213.4

Non-interest expense:

     

  Compensation and benefits

350.4

 

341.7

  Occupancy and equipment 

99.1

 

99.0

  Professional and outside services

63.6

 

64.2

  Amortization of other acquisition-related intangible assets

19.8

 

20.9

  Regulatory assessments

15.9

 

17.4

  Operating lease expense

15.4

 

18.6

  Other non-interest expense

52.7

 

62.3

    Total non-interest expense (1)

616.9

 

624.1

    Income before income tax expense

397.9

 

276.6

Income tax expense

82.6

 

56.3

    Net income

315.3

 

220.3

Preferred stock dividend

7.0

 

7.0

    Net income available to common shareholders

$  308.3

 

$  213.3

       

Earnings per common share:

     

   Basic

$    0.73

 

$    0.50

   Diluted 

0.73

 

0.50

       

(1) Total non-interest expense includes $30.8 million and $36.4 million of non-operating expenses for

     

     the six months ended June 30, 2021 and 2020, respectively. See Non-GAAP Financial Measures and

     

     Reconciliation to GAAP.

     

People's United Financial, Inc.

                     

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)

           
                       
 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

Three months ended

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

(dollars in millions)

Balance

Interest

Rate

 

Balance

Interest

Rate

 

Balance

Interest

Rate

Assets:

                     

Short-term investments

$    5,468.5

$      1.3

0.09%

 

$    5,000.0

$      1.2

0.10%

 

$        774.0

$      0.2

0.14%

Securities (2)

10,418.3

57.6

2.21

 

9,560.6

56.7

2.37

 

8,240.4

54.8

2.66

Loans:

                     

  Commercial real estate 

13,434.9

101.6

3.02

 

13,281.3

98.8

2.98

 

14,095.2

122.4

3.48

  Commercial and industrial 

13,570.0

110.5

3.26

 

14,319.6

118.4

3.31

 

13,895.6

114.8

3.30

  Equipment financing

4,933.7

62.5

5.07

 

4,887.7

62.8

5.13

 

4,933.8

67.6

5.48

  Residential mortgage

7,828.0

64.4

3.29

 

8,328.3

70.2

3.37

 

9,821.4

85.1

3.46

  Home equity and other consumer

1,916.2

16.2

3.39

 

2,037.1

16.5

3.23

 

2,407.1

20.1

3.34

    Total loans

41,682.8

355.2

3.41

 

42,854.0

366.7

3.42

 

45,153.1

410.0

3.63

    Total earning assets

57,569.6

$  414.1

2.88%

 

57,414.6

$ 424.6

2.96%

 

54,167.5

$ 465.0

3.43%

Other assets

6,360.5

     

6,642.1

     

7,673.9

   

    Total assets

$  63,930.1

     

$  64,056.7

     

$  61,841.4

   
                       

Liabilities and stockholders' equity:

                     

Deposits:

                     

  Non-interest-bearing

$  16,324.6

$          -

-   %

 

$  15,820.0

$         -

-   %

 

$  12,852.8

$         -

-   %

  Savings, interest-bearing checking

                     

    and money market

32,088.4

10.1

0.13

 

31,820.1

12.8

0.16

 

27,402.5

17.0

0.25

  Time

4,627.6

7.0

0.61

 

5,236.4

9.9

0.75

 

8,191.4

24.7

1.21

    Total deposits

53,040.6

17.1

0.13

 

52,876.5

22.7

0.17

 

48,446.7

41.7

0.34

Borrowings:

                     

  Federal Home Loan Bank advances

569.7

1.0

0.70

 

569.7

1.0

0.72

 

1,858.8

1.5

0.32

  Customer repurchase agreements

379.6

-

0.11

 

422.8

0.2

0.13

 

357.2

0.2

0.24

  Federal funds purchased

62.6

0.1

0.09

 

150.6

-

0.09

 

695.5

0.3

0.15

    Total borrowings

1,011.9

1.1

0.44

 

1,143.1

1.2

0.42

 

2,911.5

2.0

0.27

Notes and debentures

1,003.6

7.2

2.89

 

1,007.8

7.2

2.87

 

1,013.8

8.3

3.29

    Total funding liabilities

55,056.1

$    25.4

0.19%

 

55,027.4

$   31.1

0.23%

 

52,372.0

$   52.0

0.40%

Other liabilities

1,239.8

     

1,423.4

     

1,712.6

   

    Total liabilities

56,295.9

     

56,450.8

     

54,084.6

   

Stockholders' equity

7,634.2

     

7,605.9

     

7,756.8

   

    Total liabilities and

                     

      stockholders' equity

$  63,930.1

     

$  64,056.7

     

$  61,841.4

   
                       

Net interest income/spread (3)

 

$  388.7

2.69%

   

$ 393.5

2.73%

   

$ 413.0

3.03%

                       

Net interest margin

   

2.70%

     

2.74%

     

3.05%

                       

(1) Average yields earned and rates paid are annualized. 

               

(2) Average balances and yields for securities are based on amortized cost.

               

(3) The fully taxable equivalent adjustment was $7.8 million, $7.6 million and $7.4 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

         

People's United Financial, Inc.

             

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)

             
               
   

June 30, 2021

     

June 30, 2020

 

Six months ended

Average

 

Yield/

 

Average

 

Yield/

(dollars in millions)

Balance

Interest

Rate

 

Balance

Interest

Rate

Assets:

             

Short-term investments

$    5,235.5

$                 2.5

0.10%

 

$        531.9

$        2.2

0.84%

Securities (2)

9,991.9

114.3

2.29

 

8,131.1

110.8

2.73

Loans:

             

  Commercial real estate

13,358.6

200.4

3.00

 

14,405.2

272.0

3.78

  Commercial and industrial

13,942.7

228.9

3.28

 

12,381.1

224.6

3.63

  Equipment financing

4,910.8

125.3

5.10

 

4,924.7

135.8

5.51

  Residential mortgage

8,076.8

134.6

3.33

 

10,028.9

175.6

3.50

  Home equity and other consumer

1,976.3

32.7

3.31

 

2,566.6

50.8

3.96

    Total loans

42,265.2

721.9

3.42

 

44,306.5

858.8

3.88

    Total earning assets

57,492.6

$            838.7

2.92%

 

52,969.5

$   971.8

3.67%

Other assets

6,500.5

     

7,253.0

   

    Total assets

$  63,993.1

     

$  60,222.5

   
               

Liabilities and stockholders' equity:

             

Deposits:

             

  Non-interest-bearing

$  16,073.7

$                    -

-   %

 

$  11,465.3

$           -

-   %

  Savings, interest-bearing checking

             

    and money market

31,955.0

22.9

0.14

 

26,171.6

61.1

0.47

  Time

4,930.3

16.9

0.69

 

8,668.0

59.5

1.37

    Total deposits

52,959.0

39.8

0.15

 

46,304.9

120.6

0.52

Borrowings:

             

  Federal Home Loan Bank advances

569.7

2.0

0.71

 

2,144.7

11.3

1.05

  Customer repurchase agreements

401.0

0.2

0.12

 

342.6

0.7

0.44

  Federal funds purchased

106.4

0.1

0.09

 

1,144.7

5.4

0.93

    Total borrowings

1,077.1

2.3

0.43

 

3,632.0

17.4

0.96

Notes and debentures

1,005.7

14.4

2.88

 

1,006.7

17.1

3.40

    Total funding liabilities

55,041.8

$               56.5

0.21%

 

50,943.6

$   155.1

0.61%

Other liabilities

1,331.1

     

1,498.4

   

    Total liabilities

56,372.9

     

52,442.0

   

Stockholders' equity

7,620.2

     

7,780.5

   

    Total liabilities and

             

      stockholders' equity

$  63,993.1

     

$  60,222.5

   
               

Net interest income/spread (3)

 

$            782.2

2.71%

   

$   816.7

3.06%

               

Net interest margin

   

2.72%

     

3.08%

               

(1) Average yields earned and rates paid are annualized.

             

(2) Average balances and yields for securities are based on amortized cost.

             

(3) The fully taxable equivalent adjustment was $15.4 million and $15.1 million for the six months ended June 30, 2021 and 2020, respectively.

           
               

People's United Financial, Inc.

                     

NON-PERFORMING ASSETS

                     
                       
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

Non-accrual loans:

                     

Commercial:

                     

  Commercial real estate

$

96.1

$

90.2

$

60.4

$

85.3

$

73.6

 

  Commercial and industrial

 

57.0

 

69.2

 

76.4

 

86.7

 

88.8

 

  Equipment financing

 

107.2

 

118.1

 

109.3

 

49.0

 

48.6

 

    Total Commercial

 

260.3

 

277.5

 

246.1

 

221.0

 

211.0

 

Retail:

                     

  Residential mortgage

 

49.5

 

56.9

 

62.3

 

62.9

 

62.6

 

  Home equity

 

18.1

 

18.7

 

20.5

 

22.1

 

22.5

 

  Other consumer

 

0.1

 

0.2

 

0.2

 

0.2

 

0.1

 

    Total Retail

 

67.7

 

75.8

 

83.0

 

85.2

 

85.2

 

    Total non-accrual loans (1)

 

328.0

 

353.3

 

329.1

 

306.2

 

296.2

 

Real estate owned:

                     

  Commercial

 

3.5

 

3.5

 

3.6

 

3.6

 

7.3

 

  Residential

 

1.6

 

1.5

 

3.2

 

1.9

 

4.9

 

    Total real estate owned

 

5.1

 

5.0

 

6.8

 

5.5

 

12.2

 

Repossessed assets

 

5.6

 

5.4

 

5.7

 

9.7

 

6.2

 

    Total non-performing assets

$

338.7

$

363.7

$

341.6

$

321.4

$

314.6

 
                       

Non-accrual loans as a percentage of total loans

 

0.79

%

0.83

%

0.75

%

0.68

%

0.65

%

Non-performing assets as a percentage of:

                     

  Total loans, real estate owned and repossessed assets

 

0.82

 

0.85

 

0.78

 

0.71

 

0.69

 

  Tangible stockholders' equity and allowance

                     

     for credit losses

 

6.43

 

7.05

 

6.59

 

6.41

 

6.39

 
                       

(1) Reported net of government guarantees totaling $1.2 million at June 30, 2021, $2.5 million at March 31, 2021,  
      $2.5 million at December 31, 2020, $2.4 million at September 30, 2020 and $2.9 million at June 30, 2020

                     

     .

                     

People's United Financial, Inc.

                     
                       

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

                     
                       
   

 

Three Months Ended

 
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept 30,

 

June 30,

 

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

Allowance for credit losses on loans:

                     

Balance at beginning of period

$

399.1

$

425.1

$

423.8

$

414.0

$

341.7

 

  Charge-offs 

 

(13.9)

 

(17.8)

 

(16.7)

 

(19.3)

 

(10.3)

 

  Recoveries 

 

3.6

 

5.4

 

3.3

 

2.0

 

1.8

 

    Net loan charge-offs 

 

(10.3)

 

(12.4)

 

(13.4)

 

(17.3)

 

(8.5)

 

  Provision for credit losses on loans 

 

(40.7)

 

(13.6)

 

14.7

 

27.1

 

80.8

 

    Balance at end of period 

$

348.1

$

399.1

$

425.1

$

423.8

$

414.0

 
                       

Allowance for credit losses on loans 

                     

   as a percentage of:

                     

    Total loans

 

0.84

%

0.93

%

0.97

%

0.94

%

0.91

%

    Non-accrual loans

 

106.1

 

113.0

 

129.1

 

138.4

 

139.8

 
                       
                       
                       

NET LOAN CHARGE-OFFS (RECOVERIES)

                     
                       
 

Three Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

Commercial:

                     

  Commercial real estate

$

0.8

$

5.8

$

0.1

$

4.1

$

1.8

 

  Commercial and industrial

 

3.0

 

(0.5)

 

6.6

 

6.9

 

-

 

  Equipment financing

 

6.9

 

7.2

 

6.8

 

6.2

 

5.2

 

    Total

 

10.7

 

12.5

 

13.5

 

17.2

 

7.0

 

Retail:

                     

  Residential mortgage

 

(0.4)

 

(0.3)

 

(0.3)

 

(0.2)

 

-

 

  Home equity

 

(0.2)

 

(0.2)

 

-

 

-

 

0.6

 

  Other consumer

 

0.2

 

0.4

 

0.2

 

0.3

 

0.9

 

    Total

 

(0.4)

 

(0.1)

 

(0.1)

 

0.1

 

1.5

 

    Total net loan charge-offs

$

10.3

$

12.4

$

13.4

$

17.3

$

8.5

 
                       

Net loan charge-offs to

                     

  average total loans (annualized)

 

0.10

%

0.12

%

0.12

%

0.15

%

0.08

%

People's United Financial, Inc.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP

 
 

    In addition to evaluating People's United Financial Inc. ("People's United") results of operations in accordance with

U.S. generally accepted accounting principles ("GAAP"), management routinely supplements its evaluation with an analysis

of certain non-GAAP financial measures, such as the efficiency and tangible common equity ratios, tangible book value per

common share and operating earnings metrics. Management believes these non-GAAP financial measures provide

information useful to investors in understanding People's United's underlying operating performance and trends, and

facilitates comparisons with the performance of other financial institutions. 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 common equity ratio and tangible book value per common share are used to analyze the 

relative strength of People's United's capital position. 

 

    The efficiency ratio, which represents an approximate measure of the cost required by People's United to generate a

dollar of revenue, is the ratio of (i) total non-interest expense (excluding operating lease expense, goodwill impairment 

charges, amortization of other acquisition-related intangible assets, losses on real estate assets and non-recurring

expenses) (the numerator) to (ii) net interest income on a fully taxable equivalent ("FTE") basis plus total non-interest

income (including the FTE adjustment on bank-owned life insurance ("BOLI") income, the netting of operating lease 

expense and excluding gains and losses on sales of assets other than residential mortgage loans and acquired loans, and

non-recurring income) (the denominator). People's United 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 available to common shareholders 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'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: (i) non-recurring gains/losses; (ii) merger-related expenses, including

acquisition integration and other costs; (iii) writedowns of banking house assets and related lease termination costs; 

(iv) severance-related costs; and (v) charges related to executive-level management separation costs, are generally also

excluded when calculating the efficiency ratio. Operating earnings per common share ("EPS") is derived by determining the

per common share impact of the respective adjustments to arrive at operating earnings and adding (subtracting) such

amounts to (from) diluted EPS, as reported. Operating return on average assets is calculated by dividing operating earnings

(annualized) by average total assets. Operating return on average tangible common equity is calculated by dividing

operating earnings (annualized) by average tangible common equity. The operating common dividend payout ratio is

calculated by dividing common dividends paid by operating earnings for the respective period.

 

    Pre-provision net revenue is a useful financial measure as it enables an assessment of the Company's ability to generate

earnings to cover credit losses through a credit cycle as well as providing an additional basis for comparing the Company's

results of operation between periods by isolating the impact of the provision for credit losses, which can vary significantly

between periods.

 

    The tangible common equity ratio is the ratio of (i) tangible common equity (total stockholders' equity less preferred

stock, goodwill and other acquisition-related intangible assets) (the numerator) to (ii) tangible assets (total assets less

goodwill and other acquisition-related intangible assets) (the denominator). Tangible book value per common share is

calculated by dividing tangible common equity by common shares (total common shares issued, less common shares

classified as treasury shares and unallocated Employee Stock Ownership Plan ("ESOP") common shares).

 

    In light of diversity in presentation among financial institutions, the methodologies used by People's United 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

                 
                             

OPERATING NON-INTEREST EXPENSE AND EFFICIENCY RATIO

                     
   

 

Three Months Ended

 

 

Six Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Total non-interest expense 

 

$  305.0

 

$     311.9

 

$   646.4

 

$   293.6

 

$   304.0

 

$     616.9

 

$     624.1

Adjustments to arrive at operating

                           

  non-interest expense:

                           

  Merger-related expenses

 

(9.2)

 

(7.5)

 

(4.9)

 

(4.6)

 

(18.5)

 

(16.7)

 

(36.4)

  Stop & Shop contract termination costs

 

(2.0)

 

(12.1)

 

-

 

-

 

-

 

(14.1)

 

-

  Goodwill impairment charge

 

-

 

-

 

(353.0)

 

-

 

-

 

-

 

-

    Total

 

(11.2)

 

(19.6)

 

(357.9)

 

(4.6)

 

(18.5)

 

(30.8)

 

(36.4)

    Operating non-interest expense

 

293.8

 

292.3

 

288.5

 

289.0

 

285.5

 

586.1

 

587.7

                             

Adjustments:

                           

  Amortization of other acquisition-related

                           

     intangible assets

 

(8.8)

 

(11.0)

 

(9.7)

 

(10.2)

 

(10.2)

 

(19.8)

 

(20.9)

  Operating lease expense

 

(7.6)

 

(7.8)

 

(8.5)

 

(9.3)

 

(8.8)

 

(15.4)

 

(18.6)

  Other (1)

 

(1.3)

 

(1.7)

 

(1.3)

 

(5.1)

 

(1.9)

 

(3.0)

 

(3.8)

    Total non-interest expense for

                           

      efficiency ratio

 

$  276.1

 

$     271.8

 

$   269.0

 

$   264.4

 

$   264.6

 

$     547.9

 

$     544.4

                             

Net interest income (FTE basis)

 

$  388.7

 

$     393.5

 

$   390.2

 

$   398.7

 

$   413.0

 

$     782.2

 

$     816.7

Total non-interest income

 

99.0

 

94.6

 

178.2

 

101.1

 

89.6

 

193.6

 

213.4

    Total revenues

 

487.7

 

488.1

 

568.4

 

499.8

 

502.6

 

975.8

 

1,030.1

Adjustments:

                           

  Operating lease expense

 

(7.6)

 

(7.8)

 

(8.5)

 

(9.3)

 

(8.8)

 

(15.4)

 

(18.6)

  BOLI FTE adjustment

 

0.7

 

0.6

 

0.9

 

0.8

 

1.0

 

1.3

 

1.8

  Gain on sale of business, net of expenses

 

-

 

-

 

(75.9)

 

-

 

-

 

-

 

-

  Other (2)

 

-

 

(1.1)

 

-

 

(0.1)

 

-

 

(1.1)

 

(0.3)

    Total revenues for efficiency ratio

 

$  480.8

 

$     479.8

 

$   484.9

 

$   491.2

 

$   494.8

 

$     960.6

 

$  1,013.0

    Efficiency ratio

 

57.4%

 

56.6%

 

55.5%

 

53.8%

 

53.5%

 

57.0%

 

53.7%

                             

(1)  Items classified as "other" and deducted from non-interest expense for purposes of calculating the 

           

       efficiency ratio include certain franchise taxes and real estate owned expenses.

             

(2)  Items classified as "other" and deducted from total revenues for purposes of calculating the efficiency

           

       ratio include, as applicable, asset write-offs and gains/losses associated with the sale of branch locations. 

           
                             

PRE-PROVISION NET REVENUE

                           
   

 

Three Months Ended

 

 

Six Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

(in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Net interest income

 

$  380.9

 

$     385.9

 

$   382.8

 

$   391.4

 

$   405.6

 

$     766.8

 

$     801.6

Non-interest income

 

99.0

 

94.6

 

178.2

 

101.1

 

89.6

 

193.6

 

213.4

Non-interest expense

 

(305.0)

 

(311.9)

 

(646.4)

 

(293.6)

 

(304.0)

 

(616.9)

 

(624.1)

    Pre-provision net revenue

 

174.9

 

168.6

 

(85.4)

 

198.9

 

191.2

 

343.5

 

390.9

Non-operating income

 

-

 

-

 

(75.9)

 

-

 

-

 

-

 

-

Non-operating expense

 

11.2

 

19.6

 

357.9

 

4.6

 

18.5

 

30.8

 

36.4

    Operating pre-provision net revenue

 

$  186.1

 

$     188.2

 

$   196.6

 

$   203.5

 

$   209.7

 

$     374.3

 

$     427.3

People's United Financial, Inc.

                           

NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - Continued

               
                             

OPERATING EARNINGS

                         
   

 

Three Months Ended

 

 

Six Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

(dollars in millions, except per common share data)

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021 (1)

 

2020

Net income (loss) available to common shareholders

 

$    167.3

 

$     141.0

 

$ (148.8)

 

$   141.1

 

$      86.4

 

$   308.3

 

$   213.3

Adjustments to arrive at operating earnings:

                           

  Merger-related expenses

 

9.2

 

7.5

 

4.9

 

4.6

 

18.5

 

16.7

 

36.4

  Stop & Shop contract termination costs

 

2.0

 

12.1

 

-

 

-

 

-

 

14.1

 

-

  Goodwill impairment charge (2)

 

-

 

-

 

353.0

 

-

 

-

 

-

 

-

  Gain on sale of business, net of expenses

 

-

 

-

 

(75.9)

 

-

 

-

 

-

 

-

    Total pre-tax adjustments

 

11.2

 

19.6

 

282.0

 

4.6

 

18.5

 

30.8

 

36.4

  Tax effect (2)

 

(2.4)

 

(4.1)

 

14.5

 

(1.0)

 

(3.9)

 

(6.5)

 

(7.7)

    Total adjustments, net of tax

 

8.8

 

15.5

 

296.5

 

3.6

 

14.6

 

24.3

 

28.7

    Operating earnings

 

$    176.1

 

$     156.5

 

$   147.7

 

$   144.7

 

$   101.0

 

$   332.6

 

$   242.0

                             

Diluted EPS, as reported

 

$      0.39

 

$       0.33

 

$   (0.35)

 

$      0.34

 

$      0.21

 

$      0.73

 

$      0.50

Adjustments to arrive at operating EPS:

                           

  Merger-related expenses

 

0.02

 

0.02

 

0.01

 

-

 

0.03

 

0.04

 

0.07

  Stop & Shop contract termination costs

 

-

 

0.02

 

-

 

-

 

-

 

0.02

 

-

  Goodwill impairment charge (2)

 

-

 

-

 

0.83

 

-

 

-

 

-

 

-

  Gain on sale of business, net of expenses

 

-

 

-

 

(0.14)

 

-

 

-

 

-

 

-

    Total adjustments per common share 

 

0.02

 

0.04

 

0.70

 

-

 

0.03

 

0.06

 

0.07

    Operating EPS

 

$      0.41

 

$       0.37

 

$      0.35

 

$      0.34

 

$      0.24

 

$      0.79

 

$      0.57

                             

Average total assets

 

$  63,930

 

$   64,057

 

$ 62,396

 

$ 61,293

 

$ 61,841

 

$ 63,993

 

$ 60,223

                             

Operating return on

                           

  average assets (annualized)

 

1.10%

 

0.98%

 

0.95%

 

0.94%

 

0.65%

 

1.04%

 

0.80%

                             

(1) The sum of the quarterly amounts for certain line items may not equal the six months amounts due to rounding.

           

(2) The goodwill impairment charge for the three months ended December 31, 2020 is non-tax-deductible.

           
                             

OPERATING RETURN ON AVERAGE TANGIBLE COMMON EQUITY

                   
   

 

Three Months Ended

 

 

Six Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Operating earnings

 

$    176.1

 

$     156.5

 

$   147.7

 

$   144.7

 

$   101.0

 

$   332.6

 

$   242.0

                             

Average stockholders' equity

 

$    7,634

 

$     7,606

 

$   7,884

 

$   7,801

 

$   7,757

 

$   7,620

 

$   7,781

Less: Average preferred stock

 

244

 

244

 

244

 

244

 

244

 

244

 

244

Average common equity

 

7,390

 

7,362

 

7,640

 

7,557

 

7,513

 

7,376

 

7,537

Less: Average goodwill and average other

                           

         acquisition-related intangible assets

 

2,831

 

2,842

 

3,213

 

3,249

 

3,259

 

2,836

 

3,264

Average tangible common equity

 

$    4,559

 

$     4,520

 

$   4,427

 

$   4,308

 

$   4,254

 

$   4,540

 

$   4,273

                             

Operating return on average tangible

                           

  common equity (annualized)

 

15.4%

 

13.8%

 

13.3%

 

13.4%

 

9.5%

 

14.7%

 

11.3%

People's United Financial, Inc.

                 

NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - Continued

               
                             

OPERATING COMMON DIVIDEND PAYOUT RATIO

                   
   

 

Three Months Ended

 

 

Six Months Ended

   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Common dividends paid

 

$      77.3

 

$       75.7

 

$      75.6

 

$      75.7

 

$      75.5

 

$   153.0

 

$   152.8

Operating earnings

 

$    176.1

 

$     156.5

 

$   147.7

 

$   144.7

 

$   101.0

 

$   332.6

 

$   242.0

                             

Operating common dividend payout ratio

 

43.9%

 

48.4%

 

51.2%

 

52.3%

 

74.8%

 

46.0%

 

63.1%

                             

TANGIBLE COMMON EQUITY RATIO

                       
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

       

(dollars in millions)

 

2021

 

2021

 

2020

 

2020

 

2020

       

Total stockholders' equity

 

$    7,750

 

$     7,592

 

$   7,603

 

$   7,831

 

$   7,763

       

Less: Preferred stock

 

244

 

244

 

244

 

244

 

244

       

Common equity

 

7,506

 

7,348

 

7,359

 

7,587

 

7,519

       

Less: Goodwill and other

                           

         acquisition-related intangible assets

 

2,826

 

2,835

 

2,846

 

3,244

 

3,254

       

Tangible common equity

 

$    4,680

 

$     4,513

 

$   4,513

 

$   4,343

 

$   4,265

       
                             

Total assets

 

$  63,341

 

$   64,172

 

$ 63,092

 

$ 60,871

 

$ 61,510

       

Less: Goodwill and other

                           

         acquisition-related intangible assets

 

2,826

 

2,835

 

2,846

 

3,244

 

3,254

       

Tangible assets

 

$  60,515

 

$   61,337

 

$ 60,246

 

$ 57,627

 

$ 58,256

       
                             

Tangible common equity ratio

 

7.7%

 

7.4%

 

7.5%

 

7.5%

 

7.3%

       
                             

TANGIBLE BOOK VALUE PER COMMON SHARE

                   
   

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

       

(in millions, except per common share data)

 

2021

 

2021

 

2020

 

2020

 

2020

       

Tangible common equity

 

$    4,680

 

$     4,513

 

$   4,513

 

$   4,343

 

$   4,265

       
                             

Common shares issued

 

536.75

 

536.20

 

533.68

 

533.67

 

533.59

       

Less: Shares classified as treasury shares

 

108.98

 

108.98

 

109.00

 

109.00

 

109.00

       

Common shares outstanding

 

427.77

 

427.22

 

424.68

 

424.67

 

424.59

       

Less: Unallocated ESOP shares

 

5.40

 

5.49

 

5.57

 

5.66

 

5.75

       

Common shares

 

422.37

 

421.73

 

419.11

 

419.01

 

418.84

       
                             

Tangible book value per common share

 

$    11.08

 

$     10.70

 

$   10.77

 

$   10.18

 

$   10.07

       

SOURCE BRIDGEPORT, Conn., July 15, 2021 /PRNewswire/ -- People's United Financial

Certain statements contained in this release are forward-looking in nature.  These include all statements about People's United Financial's plans, objectives, expectations and other statements that are not historical facts, and usually use words such as "expect," "anticipate," "believe," "should" and similar expressions.  Such statements represent management's current beliefs, based upon information available at the time the statements are made, with regard to the matters addressed.  All forward-looking statements are subject to risks and uncertainties that could cause People's United Financial's actual results or financial condition to differ materially from those expressed in or implied by such statements.  Factors of particular importance to People's United Financial include, but are not limited to: (1) changes in general, international, national or regional economic conditions; (2) changes in interest rates; (3) changes in loan default and charge-off rates; (4) changes in deposit levels; (5) changes in levels of income and expense in non-interest income and expense related activities; (6) changes in accounting and regulatory guidance applicable to banks; (7) price levels and conditions in the public securities markets generally; (8) competition and its effect on pricing, spending, third-party relationships and revenues; (9) the pending merger with M&T Bank Corporation; (10) changes in regulation resulting from or relating to financial reform legislation; and (11) the COVID-19 pandemic and its effect on the economic and business environment in which we operate.  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.