People's United Financial, Inc (NASDAQ: PBCT) reported Thursday net income of $61.2 million, or $0.18 per share, for the fourth quarter of 2012, compared to $41.4 million, or $0.12 per share, for the fourth quarter of 2011, and $62.2 million, or $0.18per share, for the third quarter of 2012. Operating earnings were $63.2 million, or $0.19 per share, for the fourth quarter of 2012, compared to $57.1 million, or $0.17 per share, for the fourth quarter of 2011, and $64.4 million, or $0.19 per share, for the third quarter of 2012.
For the year ended December 31, 2012, net income totaled $245.3 million, or $0.72 per share, compared to $192.4 million, or $0.55 per share, for 2011. Operating earnings were $253.9 million, or $0.75 per share, for 2012, compared to $230.7 million, or $0.66 per share, for 2011.
The Company's Board of Directors declared a $0.16 per share quarterly dividend, payable February 15, 2013 to shareholders of record on February 1, 2013. Based on the closing stock price on January 16, 2013, the dividend yield on People's United Financial common stock is 5.1 percent.
During the fourth quarter of 2012 the Company repurchased 4.7 million shares of People's United Financial common stock at a total cost of $56 millionand, in 2012, the Company repurchased 18.2 million shares of common stock at a total cost of $220 million. Under the new share repurchase authorization announced in November 2012, 33.4 million shares of common stock remain available for repurchase.
"Our performance throughout 2012 continues to build on the execution of our primary objectives optimizing existing businesses and efficiently deploying capital," stated Jack Barnes, President and Chief Executive Officer. "Our financial results in 2012 reflect stable operating metrics in a challenging economic environment, supported by solid loan and deposit growth, strength in our fee income businesses and meaningful cost control."
Barnes continued, "We are encouraged by continued strong loan and deposit growth within our legacy franchise and as a result of the strategic revenue initiatives undertaken during the past year. In particular, mortgage warehouse lending, asset-based lending, New York commercial real estate and equipment finance, contributed to total loan growth of $1.4 billion during 2012. The $935 million increase in total deposits in 2012 is confirmation of our dedication to superior customer service and a full-range of products as well as continued emphasis on leveraging our brand throughout the franchise, including targeted in-store branch acquisitions and an expanded presence in the Boston and New York City MSAs."
Barnes concluded, "We continue to demonstrate our ability to prudently and effectively deploy capital through organic loan and deposit growth, a consistent dividend policy, share repurchases and a thoughtful acquisition strategy."
"On an operating basis, earnings were $63 million, or 19 cents per share, this quarter," stated Kirk W. Walters, Senior Executive Vice President and Chief Financial Officer. "The Company's performance in the fourth quarter reflects our continued focus on operating leverage through increased fee-based income and ongoing expense control to mitigate the negative impact of this prolonged low interest rate environment."
Walters continued, "The net interest margin this quarter primarily reflects the impact of significant loan originations, continued run-off of the acquired loan portfolio and an increase in the investment portfolio. Non-interest income reflects ongoing improvement in most of our fee-based businesses as well as higher loan prepayment fees and gains on sales of residential mortgage loans. Regarding expenses, we are pleased with the steady progress as evidenced by the continued downward trend in operating non-interest expense."
Walters concluded, "We certainly are pleased with the continued improvement in asset quality. Our loan charge-off ratio throughout 2012 represented less than one-half of our peers', which is a reflection of the Company's historically strong underwriting standards, the economic strength of the geography in which we operate and the resilience of our customers. Of note, non-performing loans in the acquired portfolio have declined $178 million, or 50 percent, since December 31, 2010."
For the originated loan portfolio, non-performing loans equaled 1.30 percent of loans at December 31, 2012, compared to 1.45 percent at September 30, 2012 and 1.75 percent at December 31, 2011. Non-performing assets (excluding acquired non-performing loans) equaled 1.48 percent of originated loans, REO and repossessed assets at December 31, 2012, compared to 1.59 percent at September 30, 2012 and 2.00 percent at December 31, 2011. Net loan charge-offs as a percentage of average loans on an annualized basis were 0.19 percent in the fourth quarter of 2012 compared to 0.18 percent in the third quarter.
Non-performing loans in the acquired portfolio, which represent the contractual balances of loans acquired that meet our definition of non-performing but are not, under the accounting model for acquired loans, subject to classification as non-accrual in the same manner as originated loans, totaled $181.6 million at December 31, 2012, compared to $202.0 million at September 30, 2012 and $249.0 million at December 31, 2011.
Operating return on average assets was 0.87 percent for the fourth quarter of 2012, compared to 0.84 percent for the fourth quarter of 2011 and 0.91 percent for the third quarter of 2012. Operating return on average tangible stockholders' equity was 8.6 percent for the fourth quarter of 2012, compared to 7.2 percent for the fourth quarter of 2011 and 8.6 percent for the third quarter of 2012.
At December 31, 2012, People's United Financial's tier 1 common and total risk-based capital ratios were 12.7 percent and 14.7 percent, respectively, and the tangible equity ratio stood at 10.2 percent. People's United Bank's tier 1 risk-based capital and total risk-based capital ratios were 12.2 percent and 13.1 percent, respectively, at December 31, 2012.
People's United Financial, a diversified financial services company with $30 billion in assets, provides commercial and retail banking, as well as wealth management services through a network of 419 branches in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine. Through its subsidiaries, People's United Financial provides equipment financing, brokerage and insurance services. Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled $11.4 billion and $4.5 billion, respectively, at December 31, 2012.
Conference Call
On January 17, 2013, at 5 p.m., Eastern Time, People's United Financial will host a conference call to discuss this earnings announcement. The call may be heard through www.peoples.com by selecting "Investor Relations" in the "About Us" section on the home page, and then selecting "Conference Calls" in the "News and Events" section. Additional materials relating to the call may also be accessed at People's United Bank's web site. The call will be archived on the web site and available for approximately 90 days.
4Q 2012 Financial Highlights
Summary
Net income was $61.2 million, or $0.18 per share.
Operating earnings were $63.2 million, or $0.19 per share.
Net interest income totaled $225.1 million compared to $234.8 million in 3Q12.
Interest income on acquired loans decreased $6.9 million from 3Q12 to $41.8 million.
Cost recovery income on acquired loans, representing cash receipts in excess of carrying amount, totaled $4.1 million in 3Q12.
Operating net interest margin decreased 19 basis points from 3Q12 to 3.63%.
The effects of new loan volume at lower rates and lower interest income on acquired loans reduced the margin by 7 and 5 basis points, respectively.
An increase in investment balances reduced the margin by 4 basis points.
The run-off of fair value amortization on acquired deposits and the issuance of senior notes during the quarter each reduced the margin by 2 basis points.
Lower deposit rates and improved mix benefited the margin by 3 basis points.
Provision for loan losses totaled $12.0 million.
Net loan charge-offs totaled $10.0 million, of which $5.2 million related to loans with specific reserves established in prior periods.
Reflects a $7.2 million increase in the allowance for loan losses due to loan growth.
Non-interest income was $84.3 million in 4Q12 compared to $81.4 million in 3Q12.
Loan prepayment fees increased $2.7 million from 3Q12.
Net gains on sales of residential mortgage loans increased $2.5 million from 3Q12.
Insurance revenue decreased $2.8 million from 3Q12, primarily reflecting the seasonal nature of insurance renewals.
Non-interest expense totaled $207.4 million in 4Q12 compared to $208.9 million in 3Q12.
Operating non-interest expense was $204.5 million in 4Q12 compared to $205.7 million in 3Q12.
Compensation and benefits expense decreased $9.3 million from 3Q12, primarily reflecting lower incentive costs, including the benefit associated with the final vesting of stock awards granted in 2007 in connection with the Company's second step conversion.
Real estate owned expenses declined $2.4 million from 3Q12.
Efficiency ratio in 4Q12 increased to 63.1% from 61.4% in 3Q12, primarily reflecting the decrease in interest income on acquired loans.
Effective income tax rate was 32.0% for 4Q12 and 32.4% for 2012.
Commercial Banking
Commercial banking loans, excluding acquired loans, increased $1.1 billion from September 30, 2012.
Average commercial banking loans totaled $15.1 billion in 4Q12, an increase of $436 million, or 12% annualized, from 3Q12.
The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 1.20% at December 31, 2012compared to 1.49% at September 30, 2012.
Non-performing commercial banking assets, excluding acquired non-performing loans, totaled $186.1 million at December 31, 2012compared to $211.3 million at September 30, 2012.
Net loan charge-offs totaled $6.2 million, or 0.16% annualized, of average commercial banking loans in 4Q12, compared to $7.2 million, or 0.20% annualized, in 3Q12.
For the originated commercial banking portfolio, the allowance for loan losses as a percentage of loans was 1.13% at December 31, 2012compared to 1.22% at September 30, 2012.
The commercial banking originated allowance for loan losses represented 95% of originated non-performing commercial banking loans atDecember 31, 2012 compared to 82% at September 30, 2012.
Commercial deposits totaled $5.8 billion at December 31, 2012 compared to $5.6 billion at September 30, 2012.
Retail Banking
Residential mortgage loans, excluding acquired loans, increased $22 million from September 30, 2012.
Average residential mortgage loans totaled $3.9 billion in 4Q12, an increase of $24 million, or 2% annualized, from 3Q12.
The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 1.84% at December 31, 2012compared to 1.73% at September 30, 2012.
Net loan charge-offs totaled $1.7 million, or 0.18% annualized, of average residential mortgage loans in 4Q12, compared to $1.3 million, or 0.13% annualized, in 3Q12.
Home equity loans, excluding acquired loans, increased $6 million from September 30, 2012.
Average home equity loans totaled $2.0 billion in 4Q12, unchanged from 3Q12.
The ratio of originated non-performing home equity loans to originated home equity loans was 1.07% at December 31, 2012 compared to 0.74% at September 30, 2012.
Net loan charge-offs totaled $1.7 million, or 0.32% annualized, of average home equity loans in 4Q12, compared to $0.6 million, or 0.13% annualized, in 3Q12.
Retail deposits totaled $16.0 billion at December 31, 2012 compared to $15.8 billion at September 30, 2012.
Certain statements contained in this release are forward-looking in nature. These include all statements about People's United Financial's plans, objectives, expectations and other statements that are not historical facts, and usually use words such as "expect," "anticipate," "believe," "should" and similar expressions. Such statements represent management's current beliefs, based upon information available at the time the statements are made, with regard to the matters addressed. All forward-looking statements are subject to risks and uncertainties that could cause People's United Financial's actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors of particular importance to People's United Financial include, but are not limited to: (1) changes in general, national or regional economic conditions; (2) changes in interest rates; (3) changes in loan default and charge-off rates; (4) changes in deposit levels; (5) changes in levels of income and expense in non-interest income and expense related activities; (6) residential mortgage and secondary market activity; (7) changes in accounting and regulatory guidance applicable to banks; (8) price levels and conditions in the public securities markets generally; (9) competition and its effect on pricing, spending, third-party relationships and revenues; (10) the successful integration of acquisitions; and (11) changes in regulation resulting from or relating to financial reform legislation. People's United Financial does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Access Information About People's United Financial at www.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)
2012
2012
2012 (1)
2012 (1)
2011 (1)
Earnings Data:
Net interest income
$ 225.1
$ 234.8
$ 235.6
$ 233.2
$ 239.6
Provision for loan losses
12.0
15.1
10.6
11.5
20.7
Non-interest income
84.3
81.4
75.7
72.4
71.7
Non-interest expense (2)
207.4
208.9
205.7
208.6
230.2
Operating non-interest expense (3)
204.5
205.7
202.1
205.6
207.2
Income before income tax expense
90.0
92.2
95.0
85.5
60.4
Net income
61.2
62.2
64.6
57.3
41.4
Operating earnings (3)
63.2
64.4
67.0
59.3
57.1
Selected Statistical Data:
Net interest margin (4)
3.63%
3.89%
3.96%
3.97%
4.12%
Operating net interest margin (3), (4)
3.63
3.82
3.88
3.97
4.03
Return on average assets (4)
0.85
0.88
0.93
0.83
0.61
Operating return on average assets (3), (4)
0.87
0.91
0.97
0.86
0.84
Return on average tangible assets (4)
0.91
0.95
1.01
0.91
0.66
Return on average stockholders' equity (4)
4.8
4.8
5.0
4.4
3.1
Return on average tangible stockholders' equity (4)
8.3
8.3
8.5
7.5
5.2
Operating return on average tangible
stockholders' equity (3), (4)
8.6
8.6
8.9
7.8
7.2
Efficiency ratio (3)
63.1
61.4
61.5
63.6
62.3
Common Share Data:
Basic and diluted earnings per share
$ 0.18
$ 0.18
$ 0.19
$ 0.17
$ 0.12
Operating earnings per share (3)
0.19
0.19
0.20
0.18
0.17
Dividends paid per share
0.1600
0.1600
0.1600
0.1575
0.1575
Dividend payout ratio
87.4%
87.3%
85.4%
95.9%
132.6%
Operating dividend payout ratio (3)
84.7
84.3
82.2
92.6
96.0
Book value per share (end of period)
$ 15.21
$ 15.20
$ 15.09
$ 15.00
$ 14.96
Tangible book value per share (end of period) (3)
8.71
8.77
8.72
8.71
8.72
Stock price:
High
12.50
12.55
13.50
13.79
13.07
Low
11.36
11.20
11.25
12.20
10.91
Close (end of period)
12.09
12.14
11.61
13.23
12.85
Common shares (end of period) (in millions)
331.27
335.95
340.33
344.73
348.68
Weighted average diluted common shares (in millions)
331.39
336.48
340.67
344.97
346.68
(1) (A) As previously disclosed, reported amounts for the three months ended June 30, 2012, March 31, 2012 and Dec. 31, 2011
were revised to reflect a reduction in net interest income, which, after taxes, reduced net income by $0.2 million,
$1.3 million and $1.6 million, respectively. There were no changes to basic and diluted earnings per share in any
of these periods. Certain statistical data and other per common share data were revised accordingly.
(2) Includes a total of $2.9 million, $3.2 million, $3.6 million, $3.0 million and $23.0 million of merger-related expenses
and one-time charges for the three months ended Dec. 31, 2012, Sept. 30, 2012, June 30, 2012, March 31, 2012 and
Dec. 31, 2011, 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)
2012
2011 (1)
Earnings Data:
Net interest income
$ 928.7
$ 913.4
Provision for loan losses
49.2
63.7
Non-interest income
313.8
307.6
Non-interest expense (2)
830.6
871.9
Operating non-interest expense (3)
817.9
815.1
Income before income tax expense
362.7
285.4
Net income
245.3
192.4
Operating earnings (3)
253.9
230.7
Selected Statistical Data:
Net interest margin
3.86%
4.10%
Operating net interest margin (3)
3.82
4.03
Return on average assets
0.87
0.74
Operating return on average assets (3)
0.90
0.89
Return on average tangible assets
0.95
0.80
Return on average stockholders' equity
4.7
3.6
Return on average tangible stockholders' equity
8.2
6.0
Operating return on average tangible
stockholders' equity (3)
8.5
7.2
Efficiency ratio (3)
62.4
64.0
Common Share Data:
Basic and diluted earnings per share
$ 0.72
$ 0.55
Operating earnings per share (3)
0.75
0.66
Dividends paid per share
0.6375
0.6275
Dividend payout ratio
88.8%
114.9%
Operating dividend payout ratio (3)
85.8
95.8
Book value per share (end of period)
$ 15.21
$ 14.96
Tangible book value per share (end of period) (3)
8.71
8.72
Stock price:
High
13.79
14.49
Low
11.20
10.50
Close (end of period)
12.09
12.85
Common shares (end of period) (in millions)
331.27
348.68
Weighted average diluted common shares (in millions)
338.35
348.74
(1) (B) Previously reported amounts for the twelve months ended December 31, 2011 have been
revised to reflect a reduction in net interest income, which, after taxes, reduced net income
by $6.4 million and basic and diluted earnings per share by $0.02. Certain statistical data and
other per common share data have been revised accordingly.
(2) Includes a total of $12.7 million and $56.8 million of merger-related expenses and one-time
charges for the twelve months ended December 30, 2012 and 2011, respectively.
(3) 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)
2012
2012
2012 (1)
2012 (1)
2011 (1)
Financial Condition Data:
General:
Total assets
$ 30,324
$ 28,576
$ 28,137
$ 27,791
$ 27,553
Loans
21,737
21,040
20,588
20,472
20,385
Securities
4,669
3,787
3,702
2,895
2,931
Short-term investments (2)
131
64
73
767
411
Allowance for loan losses
188
186
180
183
183
Goodwill and other acquisition-related intangible assets
2,154
2,160
2,166
2,169
2,174
Deposits
21,751
21,363
21,458
21,268
20,816
Borrowings
2,386
1,524
960
811
857
Notes and debentures
659
160
160
160
160
Stockholders' equity
5,039
5,107
5,135
5,170
5,215
Non-performing assets (3)
290
294
295
316
337
Net loan charge-offs
10.0
9.4
13.5
11.2
14.8
Average Balances:
Loans
$ 21,183
$ 20,727
$ 20,488
$ 20,407
$ 20,217
Securities
3,867
3,608
2,964
2,751
2,411
Short-term investments (2)
128
108
562
536
854
Loans held for sale
28
31
26
39
60
Total earning assets
25,206
24,474
24,040
23,733
23,542
Total assets
28,991
28,234
27,753
27,463
27,285
Deposits
21,557
21,372
21,190
20,843
20,597
Total funding liabilities
23,487
22,709
22,184
21,862
21,653
Stockholders' equity
5,107
5,161
5,188
5,217
5,302
Ratios:
Net loan charge-offs to average loans (annualized)
0.19%
0.18%
0.26%
0.22%
0.29%
Non-performing assets to originated loans,
real estate owned and repossessed assets (3)
1.48
1.59
1.67
1.85
2.00
Originated allowance for loan losses to:
Originated loans (3)
0.91
0.95
1.00
1.03
1.05
Originated non-performing loans (3)
70.3
66.0
65.6
61.5
59.7
Average stockholders' equity to average total assets
17.6
18.3
18.7
19.0
19.4
Stockholders' equity to total assets
16.6
17.9
18.3
18.6
18.9
Tangible stockholders' equity to tangible assets (4)
10.2
11.2
11.4
11.7
12.0
Total risk-based capital (5)
14.7
15.6
15.6
16.0
16.2
(1) (C) As previously disclosed, reported amounts as of June 30, 2012, March 31, 2012 and Dec. 31, 2011 were revised
to reflect reductions in (i) loans of $18 million, $18 million and $15 million, respectively, and (ii) stockholders' equity of
$12 million, $11 million and $10 million, respectively. Certain statistical data was revised accordingly.
(2) Includes securities purchased under agreements to resell.
(3) Excludes acquired loans.
(4) See Non-GAAP financial measures and reconciliation to GAAP.
(5) Consolidated.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
Dec. 31,
Sept. 30,
Dec. 31,
(in millions)
2012
2012
2011 (1)
Assets
Cash and due from banks
$ 470.0
$ 358.3
$ 370.2
Short-term investments
131.4
63.7
410.7
Total cash and cash equivalents
601.4
422.0
780.9
Securities:
Trading account securities, at fair value
6.5
6.3
71.8
Securities available for sale, at fair value
4,532.3
3,651.0
2,725.5
Securities held to maturity, at amortized cost
56.2
56.2
56.4
Federal Home Loan Bank stock, at cost
73.7
73.7
77.7
Total securities
4,668.7
3,787.2
2,931.4
Loans held for sale
77.0
60.0
101.9
Loans:
Commercial
8,400.0
7,951.7
7,366.8
Commercial real estate
7,294.2
7,032.8
7,172.2
Residential mortgage
3,886.1
3,891.3
3,628.4
Consumer
2,156.3
2,164.2
2,217.4
Total loans
21,736.6
21,040.0
20,384.8
Less allowance for loan losses
(188.0)
(186.0)
(182.9)
Total loans, net
21,548.6
20,854.0
20,201.9
Goodwill and other acquisition-related intangible assets
2,153.5
2,160.3
2,174.2
Premises and equipment
330.4
334.7
339.6
Bank-owned life insurance
336.5
335.5
332.7
Other assets
608.3
622.3
690.1
Total assets
$ 30,324.4
$ 28,576.0
$ 27,552.7
Liabilities
Deposits:
Non-interest-bearing
$ 5,084.3
$ 4,746.9
$ 4,506.2
Savings, interest-bearing checking and money market
11,959.8
11,729.0
10,970.4
Time
4,706.4
4,886.7
5,339.2
Total deposits
21,750.5
21,362.6
20,815.8
Borrowings:
Federal Home Loan Bank advances
1,178.3
629.3
332.4
Retail repurchase agreements
588.2
479.0
497.2
Federal funds purchased
619.0
415.0
-
Other borrowings
1.0
1.0
27.1
Total borrowings
2,386.5
1,524.3
856.7
Notes and debentures
659.0
160.4
159.6
Other liabilities
489.6
421.3
505.2
Total liabilities
25,285.6
23,468.6
22,337.3
Stockholders' Equity
Common stock
3.9
3.9
3.9
Additional paid-in capital
5,261.3
5,263.9
5,247.0
Retained earnings
756.2
750.1
734.5
Treasury stock, at cost
(712.2)
(656.2)
(493.5)
Accumulated other comprehensive loss
(96.9)
(79.0)
(95.8)
Unallocated common stock of Employee Stock Ownership Plan, at cost
(173.5)
(175.3)
(180.7)
Total stockholders' equity
5,038.8
5,107.4
5,215.4
Total liabilities and stockholders' equity
$ 30,324.4
$ 28,576.0
$ 27,552.7
(1) See Financial Highlights footnote 1C.
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)
2012
2012
2012 (1)
2012 (1)
2011 (1)
Interest and dividend income:
Commercial
$ 90.7
$ 91.3
$ 91.1
$ 92.8
$ 94.4
Commercial real estate
86.0
91.3
96.4
91.7
100.3
Residential mortgage
34.6
37.1
35.8
36.2
35.6
Consumer
19.5
19.8
20.0
20.7
21.2
Total interest on loans
230.8
239.5
243.3
241.4
251.5
Securities
20.7
20.3
18.3
18.0
17.3
Loans held for sale
0.4
0.5
0.4
0.5
0.7
Short-term investments
0.1
-
0.4
0.3
0.5
Total interest and dividend income
252.0
260.3
262.4
260.2
270.0
Interest expense:
Deposits
21.9
22.1
23.6
23.1
25.9
Borrowings
2.0
1.8
1.6
1.7
1.7
Notes and debentures
3.0
1.6
1.6
2.2
2.8
Total interest expense
26.9
25.5
26.8
27.0
30.4
Net interest income
225.1
234.8
235.6
233.2
239.6
Provision for loan losses
12.0
15.1
10.6
11.5
20.7
Net interest income after provision for loan losses
213.1
219.7
225.0
221.7
218.9
Non-interest income:
Bank service charges
31.4
33.0
32.5
30.3
31.6
Investment management fees
8.9
8.7
8.7
8.6
8.3
Insurance revenue
6.7
9.5
7.2
8.4
7.2
Brokerage commissions
2.9
2.8
3.4
3.1
2.6
Operating lease income
8.5
8.3
7.7
6.7
6.3
Net gains on sales of residential mortgage loans
6.1
3.6
2.8
3.6
2.1
Net gains (losses) on sales of acquired loans
0.3
-
0.7
-
(0.4)
Bank-owned life insurance
1.1
1.3
1.2
1.8
1.7
Merchant services income, net
1.3
1.2
1.3
1.1
1.1
Other non-interest income
17.1
13.0
10.2
8.8
11.2
Total non-interest income
84.3
81.4
75.7
72.4
71.7
Non-interest expense:
Compensation and benefits
97.4
106.7
104.5
110.3
111.0
Occupancy and equipment
37.9
36.5
34.1
33.4
34.4
Professional and outside service fees
16.8
15.8
17.5
15.3
18.7
Amortization of leased equipment
7.5
6.8
6.4
5.6
5.3
Amortization of other acquisition-related intangible assets
6.7
6.7
6.8
6.6
6.9
Merger-related expenses
-
-
-
-
13.3
Other non-interest expense
41.1
36.4
36.4
37.4
40.6
Total non-interest expense (2)
207.4
208.9
205.7
208.6
230.2
Income before income tax expense
90.0
92.2
95.0
85.5
60.4
Income tax expense
28.8
30.0
30.4
28.2
19.0
Net income
$ 61.2
$ 62.2
$ 64.6
$ 57.3
$ 41.4
Basic and diluted earnings per common share
$ 0.18
$ 0.18
$ 0.19
$ 0.17
$ 0.12
(1) See Financial Highlights footnote 1A.
(2) In addition to merger-related expenses, total non-interest expense includes $2.9 million, $3.2 million, $3.6 million,
$3.0 million and $9.7 million of non-operating expenses for the three months ended Dec. 31, 2012, Sept. 30, 2012,
June 30, 2012, March 31, 2012 and Dec. 31, 2011, 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)
2012
2011 (1)
Interest and dividend income:
Commercial
$ 365.9
$ 348.6
Commercial real estate
365.4
392.4
Residential mortgage
143.7
129.1
Consumer
80.0
84.2
Total interest on loans
955.0
954.3
Securities
77.3
83.4
Loans held for sale
1.8
2.1
Short-term investments
0.8
2.1
Total interest and dividend income
1,034.9
1,041.9
Interest expense:
Deposits
90.7
107.4
Borrowings
7.1
9.0
Notes and debentures
8.4
12.1
Total interest expense
106.2
128.5
Net interest income
928.7
913.4
Provision for loan losses
49.2
63.7
Net interest income after provision for loan losses
879.5
849.7
Non-interest income:
Bank service charges
127.2
131.3
Investment management fees
34.9
33.2
Insurance revenue
31.8
30.7
Brokerage commissions
12.2
11.9
Operating lease income
31.2
25.0
Net gains on sales of residential mortgage loans
16.1
7.6
Net gains on sales of acquired loans
1.0
7.5
Bank-owned life insurance
5.4
6.3
Merchant services income, net
4.9
4.3
Net security gains
-
8.8
Other non-interest income
49.1
41.0
Total non-interest income
313.8
307.6
Non-interest expense:
Compensation and benefits
418.9
429.0
Occupancy and equipment
141.9
133.3
Professional and outside service fees
65.4
70.6
Amortization of leased equipment
26.3
20.8
Amortization of other acquisition-related intangible assets
26.8
25.8
Merger-related expenses
-
42.9
Other non-interest expense
151.3
149.5
Total non-interest expense (2)
830.6
871.9
Income before income tax expense
362.7
285.4
Income tax expense
117.4
93.0
Net income
$ 245.3
$ 192.4
Basic and diluted earnings per common share
$ 0.72
$ 0.55
(1) See Financial Highlights footnote 1B.
(2) In addition to merger-related expenses, total non-interest expense includes $12.7 million and
$13.9 million of non-operating expenses for the twelve months ended December 31, 2012 and 2011,
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, 2012
September 30, 2012
Three months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 127.5
$ 0.1
0.22%
$ 107.7
$ -
0.17%
Securities (3)
3,866.8
22.2
2.29
3,607.7
21.5
2.38
Loans held for sale
28.2
0.4
6.40
31.4
0.5
6.05
Loans:
Commercial (4)
8,081.5
92.7
4.59
7,737.6
93.1
4.81
Commercial real estate (5)
7,043.8
86.0
4.89
6,952.2
91.3
5.25
Residential mortgage (6)
3,898.5
34.6
3.55
3,874.6
37.1
3.83
Consumer
2,159.3
19.5
3.61
2,163.2
19.8
3.67
Total loans
21,183.1
232.8
4.40
20,727.6
241.3
4.66
Total earning assets
25,205.6
$ 255.5
4.05%
24,474.4
$ 263.3
4.30%
Other assets
3,785.2
3,759.9
Total assets
$ 28,990.8
$ 28,234.3
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 4,895.7
$ -
- %
$ 4,724.6
$ -
- %
Savings, interest-bearing checking
and money market
11,863.1
8.6
0.29
11,661.7
9.0
0.31
Time
4,798.2
13.3
1.11
4,985.9
13.1
1.05
Total deposits
21,557.0
21.9
0.41
21,372.2
22.1
0.41
Borrowings:
Retail repurchase agreements
539.3
0.3
0.23
478.4
0.2
0.23
Federal Home Loan Bank advances
622.8
1.4
0.91
390.7
1.3
1.31
Federal funds purchased
465.2
0.3
0.24
295.9
0.2
0.23
Other borrowings
1.1
-
1.53
11.1
0.1
1.03
Total borrowings
1,628.4
2.0
0.50
1,176.1
1.8
0.60
Notes and debentures
301.4
3.0
3.89
160.3
1.6
4.07
Total funding liabilities
23,486.8
$ 26.9
0.45%
22,708.6
$ 25.5
0.45%
Other liabilities
397.3
364.9
Total liabilities
23,884.1
23,073.5
Stockholders' equity
5,106.7
5,160.8
Total liabilities and
stockholders' equity
$ 28,990.8
$ 28,234.3
Net interest income/spread (7)
$ 228.6
3.60%
$ 237.8
3.85%
Net interest margin
3.63%
3.89%
Operating net interest margin (8)
3.63%
3.82%
(1) Average yields earned and rates paid are annualized.
(2) See Financial Highlights footnote 1A.
(3) Average balances and yields for securities available for sale are based on amortized cost.
(4) Includes commercial and industrial loans and equipment financing loans.
(5) Interest income for the three months ended September 30, 2012 includes $3.3 million of cost recovery income; yield of 5.06%
without cost recovery income.
(6) Interest income for the three months ended September 30, 2012 includes $0.8 million of cost recovery income; yield of 3.75%
without cost recovery income.
(7) The fully taxable equivalent adjustment was $3.5 million, $3.0 million and $2.6 million for the three months ended
December 31, 2012, September 30, 2012 and December 31, 2011, respectively.
(8) 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 (2)
Three months ended
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Assets:
Short-term investments
$ 853.9
$ 0.5
0.25%
Securities (3)
2,410.9
17.9
2.97
Loans held for sale
60.3
0.7
4.61
Loans:
Commercial (4)
7,300.8
96.4
5.28
Commercial real estate (5)
7,114.9
100.3
5.64
Residential mortgage (6)
3,571.6
35.6
3.99
Consumer
2,230.1
21.2
3.80
Total loans
20,217.4
253.5
5.02
Total earning assets
23,542.5
$ 272.6
4.63%
Other assets
3,742.2
Total assets
$ 27,284.7
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 4,330.6
$ -
- %
Savings, interest-bearing checking
and money market
10,841.4
12.4
0.46
Time
5,425.2
13.5
1.00
Total deposits
20,597.2
25.9
0.50
Borrowings:
Retail repurchase agreements
527.4
0.4
0.33
Federal Home Loan Bank advances
332.9
1.2
1.49
Federal funds purchased
8.8
-
0.18
Other borrowings
27.2
0.1
0.98
Total borrowings
896.3
1.7
0.78
Notes and debentures
159.5
2.8
7.03
Total funding liabilities
21,653.0
$ 30.4
0.56%
Other liabilities
330.2
Total liabilities
21,983.2
Stockholders' equity
5,301.5
Total liabilities and
stockholders' equity
$ 27,284.7
Net interest income/spread (7)
$ 242.2
4.07%
Net interest margin
4.12%
Operating net interest margin (8)
4.03%
(1) Average yields earned and rates paid are annualized.
(2) See Financial Highlights footnote 1A.
(3) Average balances and yields for securities available for sale are based on amortized cost.
(4) Includes commercial and industrial loans and equipment financing loans.
(5) Interest income for the three months ended September 30, 2012 includes $3.3 million of cost recovery income; yield of 5.06%
without cost recovery income.
(6) Interest income for the three months ended September 30, 2012 includes $0.8 million of cost recovery income; yield of 3.75%
without cost recovery income.
(7) The fully taxable equivalent adjustment was $3.5 million, $3.0 million and $2.6 million for the three months ended
December 31, 2012, September 30, 2012 and December 31, 2011, respectively.
(8) See Non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
December 31, 2012
December 31, 2011 (1)
Twelve months ended
Average
Yield/
Average
Yield/
(dollars in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
Short-term investments
$ 332.0
$ 0.8
0.24%
$ 743.1
$ 2.0
0.28%
Securities purchased under agreements to resell
-
-
-
27.3
0.1
0.17
Securities (2)
3,299.8
81.5
2.47
2,933.3
85.1
2.90
Loans held for sale
31.1
1.8
5.91
38.8
2.1
5.42
Loans:
Commercial (3)
7,672.8
373.4
4.87
6,465.4
354.7
5.49
Commercial real estate (4)
7,031.5
365.4
5.20
6,971.8
392.4
5.63
Residential mortgage
3,823.6
143.7
3.75
3,126.8
129.1
4.13
Consumer
2,174.9
80.0
3.68
2,190.1
84.2
3.85
Total loans
20,702.8
962.5
4.65
18,754.1
960.4
5.12
Total earning assets
24,365.7
$ 1,046.6
4.30%
22,496.6
$ 1,049.7
4.67%
Other assets
3,747.2
3,531.6
Total assets
$ 28,112.9
$ 26,028.2
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing
$ 4,656.8
$ -
- %
$ 4,032.8
$ -
- %
Savings, interest-bearing checking and money market
11,556.8
38.7
0.33
9,970.1
51.0
0.51
Time
5,028.2
52.0
1.04
5,276.6
56.4
1.07
Total deposits
21,241.8
90.7
0.43
19,279.5
107.4
0.56
Borrowings:
Retail repurchase agreements
494.7
1.3
0.26
486.6
2.0
0.41
Federal Home Loan Bank advances
419.5
5.1
1.23
456.1
6.7
1.48
Federal funds purchased
195.3
0.5
0.24
8.6
-
0.13
Other borrowings
16.4
0.2
1.00
28.0
0.3
0.94
Total borrowings
1,125.9
7.1
0.63
979.3
9.0
0.92
Notes and debentures
195.5
8.4
4.28
170.4
12.1
7.08
Total funding liabilities
22,563.2
$ 106.2
0.47%
20,429.2
$ 128.5
0.63%
Other liabilities
381.8
327.7
Total liabilities
22,945.0
20,756.9
Stockholders' equity
5,167.9
5,271.3
Total liabilities and stockholders' equity
$ 28,112.9
$ 26,028.2
Net interest income/spread (5)
$ 940.4
3.83%
$ 921.2
4.04%
Net interest margin
3.86%
4.10%
Operating net interest margin (6)
3.82%
4.03%
(1) See Financial Highlights footnote 1C.
(2) Average balances and yields for securities available for sale are based on amortized cost.
(3) Includes commercial and industrial loans and equipment financing loans.
(4) Interest income for the twelve months ended December 31, 2012 includes $8.0 million of cost recovery income;
yield of 5.08% without cost recovery income.
(5) The fully taxable equivalent adjustment was $11.7 million and $7.8 million for the twelve months ended December 31, 2012
and 2011, respectively.
(6) See Non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
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.
NON-PERFORMING ASSETS
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2012
2012
2012
2012
2011
Originated non-performing loans:
Commercial Banking:
Commercial real estate
$ 84.4
$ 88.5
$ 90.5
$ 97.3
$ 106.7
Commercial and industrial
54.8
64.6
62.2
63.0
59.2
Equipment financing
27.2
37.4
37.3
39.6
42.9
Total
166.4
190.5
190.0
199.9
208.8
Retail:
Residential mortgage
65.0
60.6
63.7
70.0
68.9
Home equity
21.0
14.6
13.7
15.3
15.8
Other consumer
0.3
0.3
0.2
0.2
0.3
Total
86.3
75.5
77.6
85.5
85.0
Total originated non-performing loans (1)
252.7
266.0
267.6
285.4
293.8
REO
28.6
19.8
19.7
21.9
26.8
Repossessed assets
8.3
8.2
7.2
9.1
16.1
Total non-performing assets
$ 289.6
$ 294.0
$ 294.5
$ 316.4
$ 336.7
Acquired non-performing loans (contractual amount) (2)
$ 181.6
$ 202.0
$ 236.6
$ 247.2
$ 249.0
Originated non-performing loans as a percentage
of originated loans
1.30%
1.45%
1.52%
1.67%
1.75%
Non-performing assets as a percentage of:
Originated loans, REO and repossessed assets
1.48
1.59
1.67
1.85
2.00
Tangible stockholders' equity and originated
allowance for loan losses
9.45
9.41
9.37
9.96
10.47
(1) Reported net of government guarantees totaling $9.7 million at Dec. 31, 2012, $14.1 million at Sept. 30, 2012,
$14.8 million at June 30, 2012, $15.6 million at March 31, 2012 and $12.1 million at Dec. 31, 2011.
(2) Represents acquired loans that meet People's United Financial's definition of a non-performing loan but are not,
under the accounting model for acquired loans, subject to classification as non-accrual in the same manner as
originated loans. 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)
2012
2012
2012
2012
2011
Allowance for loan losses on originated loans:
Balance at beginning of period
$ 175.5
$ 175.5
$ 175.5
$ 175.5
$ 177.0
Charge-offs
(11.6)
(11.1)
(12.3)
(12.9)
(15.7)
Recoveries
1.6
1.7
1.5
1.7
0.9
Net loan charge-offs
(10.0)
(9.4)
(10.8)
(11.2)
(14.8)
Provision for loan losses
12.0
9.4
10.8
11.2
13.3
Balance at end of period
177.5
175.5
175.5
175.5
175.5
Allowance for loan losses on acquired loans:
Balance at beginning of period
10.5
4.8
7.7
7.4
-
Charge-offs
-
-
(2.7)
-
-
Provision for loan losses
-
5.7
(0.2)
0.3
7.4
Balance at end of period
10.5
10.5
4.8
7.7
7.4
Total allowance for loan losses
$ 188.0
$ 186.0
$ 180.3
$ 183.2
$ 182.9
Originated allowance for loan losses as a percentage of:
Originated loans
0.91%
0.95%
1.00%
1.03%
1.05%
Originated non-performing loans
70.3
66.0
65.6
61.5
59.7
Commercial banking originated allowance
for loan losses as a percentage of
originated commercial banking loans
1.13
1.22
1.29
1.34
1.39
Retail originated allowance for loan losses
as a percentage of originated retail loans
0.36
0.35
0.37
0.34
0.29
NET LOAN CHARGE-OFFS
Three Months Ended
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2012
2012
2012
2012
2011
Commercial Banking:
Commercial real estate
$ 2.5
$ 3.5
$ 6.1
$ 5.0
$ 3.9
Commercial and industrial
2.7
2.6
3.1
1.6
3.4
Equipment financing
1.0
1.1
1.2
0.6
4.5
Total
6.2
7.2
10.4
7.2
11.8
Retail:
Residential mortgage
1.7
1.3
1.4
2.0
1.6
Home equity
1.7
0.6
1.4
1.7
0.7
Other consumer
0.4
0.3
0.3
0.3
0.7
Total
3.8
2.2
3.1
4.0
3.0
Total
$ 10.0
$ 9.4
$ 13.5
$ 11.2
$ 14.8
Net loan charge-offs to average loans (annualized)
0.19%
0.18%
0.26%
0.22%
0.29%
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 their evaluation with an analysis of
certain non-GAAP financial measures, such as the efficiency and tangible equity ratios, tangible book value per
share and operating earnings metrics. Management believes these non-GAAP financial measures provide information
useful to investors in understanding People's United Financial's underlying operating performance and trends, and
facilitates comparisons with the performance of other banks and thrifts. Further, the efficiency ratio and operating
earnings metrics are used by management in its assessment of financial performance, including non-interest expense
control, while the tangible equity ratio and tangible book value per share are used to analyze the relative strength
of People's United Financial's capital position.
The efficiency ratio, which represents an approximate measure of the cost required by People's United Financial
to generate a dollar of revenue, is the ratio of (i) total non-interest expense (excluding goodwill impairment
charges, amortization of other acquisition-related intangible assets, losses on real estate assets and non-recurring
expenses) (the numerator) to (ii) net interest income on a FTE basis plus total non-interest income (including the
FTE adjustment on bank-owned life insurance ("BOLI") income, and excluding gains and losses on sales of assets
other than residential mortgage loans, and 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: (i) merger-related expenses, including acquisition integration costs; (ii) charges
related to executive-level management separation costs; (iii) severance-related costs; and (iv) writedowns of banking
house assets, are generally also excluded when calculating the efficiency ratio. Operating earnings per share is derived
by determining the per share impact of the respective adjustments to arrive at operating earnings and adding
(subtracting) such amounts to (from) GAAP earnings per share. Operating return on average assets is calculated by
dividing operating earnings (annualized) by average assets. Operating return on average tangible stockholders' equity is
calculated by dividing operating earnings (annualized) by average tangible stockholders' equity. The operating dividend
payout ratio is calculated by dividing dividends paid by operating earnings for the respective period.
Operating net interest margin excludes from the net interest margin those items that management considers to
be of such a discrete nature that, by excluding such items, People's United Financial's net interest margin can be
measured and assessed on a more consistent basis from period to period. Items excluded from operating net
interest margin include cost recovery income on acquired loans and changes in the accretable yield on acquired
loans stemming from periodic cash flow reassessments. Operating net interest margin is calculated by dividing
operating net interest income (annualized) by average earning assets.
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 Employee Stock Ownership Plan ("ESOP") common shares).
In light of diversity in presentation among financial institutions, the methodologies used by People's United
Financial for determining the non-GAAP financial measures discussed above may differ from those used by other
financial institutions.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING NON-INTEREST EXPENSE AND 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)
2012
2012
2012
2012
2011
2012
2011
Total non-interest expense
$ 207.4
$ 208.9
$ 205.7
$ 208.6
$ 230.2
$ 830.6
$ 871.9
Adjustments to arrive at operating non-interest expense:
Severance-related costs
(2.9)
(0.9)
(1.1)
(2.4)
(3.9)
(7.3)
(5.3)
Merger-related expenses
-
-
-
-
(13.3)
-
(42.9)
Executive-level separation costs
-
-
-
-
(1.0)
-
(3.8)
Writedowns of banking house assets
-
-
-
-
(4.8)
-
(4.8)
Acquisition integration costs
-
(2.3)
(2.5)
(0.6)
-
(5.4)
-
Total
(2.9)
(3.2)
(3.6)
(3.0)
(23.0)
(12.7)
(56.8)
Operating non-interest expense
204.5
205.7
202.1
205.6
207.2
817.9
815.1
Amortization of other
acquisition-related intangible assets
(6.7)
(6.7)
(6.8)
(6.6)
(6.9)
(26.8)
(25.8)
Other (1)
(0.6)
(2.7)
(2.1)
(2.4)
(4.0)
(7.8)
(10.3)
Total
$ 197.2
$ 196.3
$ 193.2
$ 196.6
$ 196.3
$ 783.3
$ 779.0
Net interest income (FTE basis)
$ 228.6
$ 237.8
$ 238.3
$ 235.7
$ 242.2
$ 940.4
$ 921.2
Total non-interest income
84.3
81.4
75.7
72.4
71.7
313.8
307.6
Total revenues
312.9
319.2
314.0
308.1
313.9
1,254.2
1,228.8
Adjustments:
BOLI FTE adjustment
0.5
0.7
0.6
0.9
0.8
2.7
3.1
Net security gains
-
-
-
-
-
-
(8.8)
Net (gains) losses on sales of acquired loans
(0.3)
-
(0.7)
-
0.4
(1.0)
(7.5)
Other (2)
(0.7)
-
-
-
(0.1)
(0.7)
2.2
Total
$ 312.4
$ 319.9
$ 313.9
$ 309.0
$ 315.0
$ 1,255.2
$ 1,217.8
Efficiency ratio
63.1%
61.4%
61.5%
63.6%
62.3%
62.4%
64.0%
(1) Items classified as "other" and deducted from non-interest expense for purposes of calculating the efficiency ratio include, as
applicable, certain franchise taxes, real estate owned expenses, contract termination costs and non-recurring expenses.
(2) Items classified as "other" and added to (deducted from) total revenues for purposes of calculating the efficiency ratio
include, as applicable, asset write-offs and gains associated with the sale of branch locations.
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)
2012
2012
2012
2012
2011
2012
2011
Net income, as reported
$ 61.2
$ 62.2
$ 64.6
$ 57.3
$ 41.4
$ 245.3
$ 192.4
Adjustments to arrive at operating earnings:
Severance-related costs
2.9
0.9
1.1
2.4
3.9
7.3
5.3
Merger-related expenses
-
-
-
-
13.3
-
42.9
Executive-level separation costs
-
-
-
-
1.0
-
3.8
Writedowns of banking house assets
-
-
-
-
4.8
-
4.8
Acquisition integration costs
-
2.3
2.5
0.6
-
5.4
-
Total pre-tax adjustments
2.9
3.2
3.6
3.0
23.0
12.7
56.8
Tax effect
(0.9)
(1.0)
(1.2)
(1.0)
(7.3)
(4.1)
(18.5)
Total adjustments, net of tax
2.0
2.2
2.4
2.0
15.7
8.6
38.3
Operating earnings
$ 63.2
$ 64.4
$ 67.0
$ 59.3
$ 57.1
$ 253.9
$ 230.7
Earnings per share, as reported
$ 0.18
$ 0.18
$ 0.19
$ 0.17
$ 0.12
$ 0.72
$ 0.55
Adjustments to arrive at operating earnings per share:
Severance-related costs
0.01
-
-
0.01
0.01
0.02
0.01
Merger-related expenses
-
-
-
-
0.03
-
0.08
Executive-level separation costs
-
-
-
-
-
-
0.01
Writedowns of banking house assets
-
-
-
-
0.01
-
0.01
Acquisition integration costs
-
0.01
0.01
-
-
0.01
-
Total adjustments per share
0.01
0.01
0.01
0.01
0.05
0.03
0.11
Operating earnings per share (1)
$ 0.19
$ 0.19
$ 0.20
$ 0.18
$ 0.17
$ 0.75
$ 0.66
Average total assets
$ 28,991
$ 28,234
$ 27,753
$ 27,463
$ 27,285
$ 28,113
$ 26,028
Operating return on
average assets (annualized)
0.87%
0.91%
0.97%
0.86%
0.84%
0.90%
0.89%
(1) The sum of the quarterly operating earnings per share amounts may not equal the full-year amount due to rounding and/or
changes in average share count.
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)
2012
2012
2012
2012
2011
2012
2011
Net interest income (FTE basis)
$ 228.6
$ 237.8
$ 238.3
$ 235.7
$ 242.2
$ 940.4
$ 921.2
Adjustments to arrive at
operating net interest income:
Cost recovery income
-
(4.1)
(4.7)
-
(5.0)
(8.8)
(5.0)
Changes in accretable yield
-
-
-
-
-
-
(11.2)
Total adjustments
-
(4.1)
(4.7)
-
(5.0)
(8.8)
(16.2)
Operating net interest income
$ 228.6
$ 233.7
$ 233.6
$ 235.7
$ 237.2
$ 931.6
$ 905.0
Net interest margin, as reported (1)
3.63%
3.89%
3.96%
3.97%
4.12%
3.86%
4.10%
Adjustments to arrive at
operating net interest margin: (1)
Cost recovery income
-
(0.07)
(0.08)
-
(0.09)
(0.04)
(0.02)
Changes in accretable yield
-
-
-
-
-
-
(0.05)
Total adjustments
-
(0.07)
(0.08)
-
(0.09)
(0.04)
(0.07)
Operating net interest margin (1)
3.63%
3.82%
3.88%
3.97%
4.03%
3.82%
4.03%
Total earning assets
$ 25,206
$ 24,474
$ 24,040
$ 23,733
$ 23,542
$ 24,366
$ 22,497
(1) 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)
2012
2012
2012
2012
2011
2012
2011
Operating earnings
$ 63.2
$ 64.4
$ 67.0
$ 59.3
$ 57.1
$ 253.9
$ 230.7
Average stockholders' equity
$ 5,107
$ 5,161
$ 5,188
$ 5,217
$ 5,302
$ 5,168
$ 5,271
Less: Average goodwill and average other
acquisition-related intangible assets
2,157
2,164
2,166
2,171
2,148
2,165
2,053
Average tangible stockholders' equity
$ 2,950
$ 2,997
$ 3,022
$ 3,046
$ 3,154
$ 3,003
$ 3,218
Operating return on average tangible
stockholders' equity (annualized)
8.6%
8.6%
8.9%
7.8%
7.2%
8.5%
7.2%
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)
2012
2012
2012
2012
2011
2012
2011
Dividends paid
$ 53.5
$ 54.3
$ 55.1
$ 54.9
$ 54.8
$ 217.8
$ 220.9
Operating earnings
$ 63.2
$ 64.4
$ 67.0
$ 59.3
$ 57.1
$ 253.9
$ 230.7
Operating dividend payout ratio
84.7%
84.3%
82.2%
92.6%
96.0%
85.8%
95.8%
TANGIBLE EQUITY RATIO
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(dollars in millions)
2012
2012
2012
2012
2011
Total stockholders' equity
$ 5,039
$ 5,107
$ 5,135
$ 5,170
$ 5,215
Less: Goodwill and other
acquisition-related intangible assets
2,154
2,160
2,166
2,169
2,174
Tangible stockholders' equity
$ 2,885
$ 2,947
$ 2,969
$ 3,001
$ 3,041
Total assets
$ 30,324
$ 28,576
$ 28,137
$ 27,791
$ 27,553
Less: Goodwill and other
acquisition-related intangible assets
2,154
2,160
2,166
2,169
2,174
Tangible assets
$ 28,170
$ 26,416
$ 25,971
$ 25,622
$ 25,379
Tangible equity ratio
10.2%
11.2%
11.4%
11.7%
12.0%
TANGIBLE BOOK VALUE PER SHARE
Dec. 31,
Sept. 30,
June 30,
March 31,
Dec. 31,
(in millions, except per share data)
2012
2012
2012
2012
2011
Tangible stockholders' equity
$ 2,885
$ 2,947
$ 2,969
$ 3,001
$ 3,041
Common shares issued
395.81
395.88
395.87
395.84
395.42
Less: Shares classified as treasury shares
56.18
51.48
47.00
42.49
38.03
Unallocated ESOP shares
8.36
8.45
8.54
8.62
8.71
Common shares
331.27
335.95
340.33
344.73
348.68
Tangible book value per share
$ 8.71
$ 8.77
$ 8.72
$ 8.71
$ 8.72
SOURCE People's United Financial, Inc. BRIDGEPORT, Conn., Jan. 17, 2013 /PRNewswire/