People's United Financial, Inc (NASDAQ: PBCT) has reported net income of $62.1 million, or $0.20 per share, for the second quarter of 2013, compared to $64.6 million, or $0.19 per share, for the second quarter of 2012, and $52.5 million, or $0.16 per share, for the first quarter of 2013. Operating earnings were $62.4 million, or $0.20 per share, for the second quarter of 2013, compared to $67.0 million, or $0.20 per share, for the second quarter of 2012, and $57.9 million, or $0.18 per share, for the first quarter of 2013.
The Company's Board of Directors declared a $0.1625 per share quarterly dividend, payable August 15, 2013 to shareholders of record on August 1, 2013. Based on the closing stock price on July 17, 2013, the dividend yield on People's United Financial common stock is 4.2 percent.
During the second quarter of 2013 the Company repurchased 11.2 million shares of People's United Financial common stock at a weighted average price of $13.63 per share and, during the first six months of 2013, the Company repurchased 22.4 million shares of common stock at a weighted average price of $13.30 per share. Under the existing share repurchase authorization, 11.0 million shares of common stock remain available for repurchase.
"Our results continue to reflect the benefits from the investments we have made in talent over the past three years that have strengthened, and will continue to strengthen, both our robust product offerings and expanded geographic footprint," statedJack Barnes, President and Chief Executive Officer. "This quarter we experienced annualized loan growth of 13 percent and deposit growth of 4 percent. Our continued progress in loan growth, both this quarter and over the past 11 quarters, is a tribute to both our relationship managers and our customers. These relationships bring our brand to life every day."
Barnes concluded, "As we expected, our net interest margin has now largely stabilized. This should allow net interest income to increase at a pace more closely aligned with our earning asset growth in the quarters ahead and, in fact, net interest income this quarter increased slightly from the first quarter. Our strong business fundamentals, ongoing ability to leverage our brand in attractive markets, and prospects for growth continue to be the foundations of our strength relative to others in the industry."
"On an operating basis, earnings were $62 million, or 20 cents per share, this quarter," stated Kirk W. Walters, Senior Executive Vice President and Chief Financial Officer. "The net interest margin reflects the impact of strong loan originations and the benefit of one more calendar day in this quarter, while non-interest income demonstrates the ongoing improvement in most of our fee-based businesses. Cost control continues to remain an important area of focus. The modest increase in operating expenses this quarter primarily reflects the timing of certain advertising and promotion expenses."
Walters concluded, "We certainly are pleased with the continued improvement in asset quality. Our low loan charge-off ratio 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 particular note, non-performing loans in the acquired portfolio declined $22 million, or 12 percent, from March 31, 2013."
Net loan charge-offs as a percentage of average loans on an annualized basis were 0.19 percent in the second quarter of 2013 compared to 0.24 percent in the first quarter of 2013. For the originated loan portfolio, non-performing loans equaled 1.18 percent of loans at June 30, 2013, compared to 1.25 percent at March 31, 2013 and 1.52 percent at June 30, 2012. Non-performing assets (excluding acquired non-performing loans) equaled 1.33 percent of originated loans, REO and repossessed assets at June 30, 2013, compared to 1.42 percent at March 31, 2013 and 1.67 percent at June 30, 2012.
Operating return on average assets was 0.81 percent for the second quarter of 2013, compared to 0.77 percent for the first quarter of 2013 and 0.97 percent for the second quarter of 2012. Operating return on average tangible stockholders' equity was 9.3 percent for the second quarter of 2013, compared to 8.1 percent for the first quarter of 2013 and 8.9 percent for the second quarter of 2012.
At June 30, 2013, People's United Financial's tier 1 common and total risk-based capital ratios were 10.8 percent and 12.8 percent, respectively, and the tangible equity ratio stood at 8.7 percent. People's United Bank's tier 1 and total risk-based capital ratios were 11.9 percent and 13.2 percent, respectively, at June 30, 2013.
People's United Financial, a diversified financial services company with $31 billion in assets, provides commercial and retail banking, as well as wealth management services through a network of 418 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 managed and administered, which are not reported as assets of People's United Financial, totaled $15.5 billion at June 30, 2013.
2Q 2013 Financial Highlights
Summary
Net income was $62.1 million, or $0.20 per share.
Operating earnings were $62.4 million, or $0.20 per share.
Net interest income totaled $220.9 million in 2Q13 compared to $219.3 million in 1Q13.
Interest income on acquired loans decreased $3.1 million from 1Q13 to $34.0 million.
Net interest margin decreased 5 basis points from 1Q13 to 3.33%.
The effect of one more calendar day in 2Q13 benefited the margin by 2 basis points.
The effects of new loan volume at lower rates, and loan repricing and amortization reduced the margin by 5 and 1 basis points, respectively.
Provision for loan losses totaled $9.2 million.
Net loan charge-offs totaled $10.8 million, of which $4.3 million related to loans with specific reserves established in prior periods.
Reflects a $3.6 million increase in the originated allowance for loan losses due to loan growth and a $0.9 millionallowance reversal related to acquired loans sold during the period.
Non-interest income was $86.1 million in 2Q13 compared to $82.9 million in 1Q13.
Bank service charges increased $2.0 million from 1Q13, in part due to the seasonal nature of certain fee categories.
Investment management fees increased $0.4 million from 1Q13.
Insurance revenue decreased $1.2 million from 1Q13, primarily reflecting the seasonal nature of insurance renewals.
Net gains on sales of acquired loans totaled $5.8 million in 2Q13.
Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled $10.7 billion and $4.8 billion, respectively, at June 30, 2013.
Non-interest expense totaled $205.8 million in 2Q13 compared to $212.0 million in 1Q13.
Operating non-interest expense was $205.4 million in 2Q13 compared to $204.0 million in 1Q13. Excluding operating lease expense and amortization of acquisition-related intangible assets, operating non-interest expense totaled $191.2 million in 2Q13 compared to $190.0 million in 1Q13.
Compensation and benefits expense decreased $3.8 million from 1Q13, primarily reflecting lower payroll-related costs in 2Q13.
Compared to 1Q13, real estate owned expenses increased $2.0 million, advertising and promotion expenses increased $1.9 million and professional and outside service fees increased $1.0 million.
Efficiency ratio in 2Q13 decreased to 62.7% from 64.1% in 1Q13, primarily reflecting the increase in total revenues.
Effective income tax rate was 32.5% for 2Q13 and 32.4% for the full year of 2012.
Commercial Banking
Commercial banking loans, excluding acquired loans, increased $747 million from March 31, 2013.
Average commercial banking loans totaled $16.2 billion in 2Q13, an increase of $538 million, or 14% annualized, from 1Q13.
The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 1.10% atJune 30, 2013 compared to 1.13% at March 31, 2013.
Non-performing commercial banking assets, excluding acquired non-performing loans, totaled $183.8 million atJune 30, 2013 compared to $179.0 million at March 31, 2013.
Net loan charge-offs totaled $6.9 million, or 0.17% annualized, of average commercial banking loans in 2Q13, compared to $9.4 million, or 0.24% annualized, in 1Q13.
Excluding acquired loan charge-offs, net loan charge-offs totaled $6.4 million, or 0.16% annualized, in 1Q13.
For the originated commercial banking portfolio, the allowance for loan losses as a percentage of loans was 1.05% atJune 30, 2013 compared to 1.11% at March 31, 2013.
The commercial banking originated allowance for loan losses represented 96% of originated non-performing commercial banking loans at June 30, 2013, compared to 98% at March 31, 2013.
Commercial deposits totaled $5.8 billion at June 30, 2013 compared to $5.6 billion at March 31, 2013.
Retail Banking
Residential mortgage loans, excluding acquired loans, increased $144 million from March 31, 2013.
Average residential mortgage loans totaled $4.0 billion in 2Q13, an increase of $116 million, or 12% annualized, from 1Q13.
The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 1.58% atJune 30, 2013 compared to 1.84% at March 31, 2013.
Net loan charge-offs totaled $2.3 million, or 0.23% annualized, of average residential mortgage loans in 2Q13, compared to $1.9 million, or 0.19% annualized, in 1Q13.
Home equity loans, excluding acquired loans, increased $21 million from March 31, 2013.
Average home equity loans totaled $2.0 billion in 2Q13, unchanged from 1Q13.
The ratio of originated non-performing home equity loans to originated home equity loans was 1.06% at June 30, 2013compared to 1.13% at March 31, 2013.
Net loan charge-offs totaled $1.4 million, or 0.28% annualized, of average home equity loans in 2Q13, compared to$1.5 million, or 0.30% annualized, in 1Q13.
Retail deposits totaled $16.2 billion at both June 30, 2013 and March 31, 2013.
Conference Call
On July 18, 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.
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
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
(dollars in millions, except per share data)
2013
2013
2012
2012
2012
Earnings Data:
Net interest income
$ 220.9
$ 219.3
$ 225.1
$ 234.8
$ 235.6
Provision for loan losses
9.2
12.4
12.0
15.1
10.6
Non-interest income
86.1
82.9
84.3
81.4
75.7
Non-interest expense
205.8
212.0
207.4
208.9
205.7
Operating non-interest expense (1)
205.4
204.0
204.5
205.7
202.1
Income before income tax expense
92.0
77.8
90.0
92.2
95.0
Net income
62.1
52.5
61.2
62.2
64.6
Operating earnings (1)
62.4
57.9
63.2
64.4
67.0
Selected Statistical Data:
Net interest margin (2)
3.33%
3.38%
3.63%
3.89%
3.96%
Operating net interest margin (1), (2)
3.33
3.38
3.63
3.82
3.88
Return on average assets (2)
0.81
0.70
0.85
0.88
0.93
Operating return on average assets (1), (2)
0.81
0.77
0.87
0.91
0.97
Return on average tangible assets (2)
0.87
0.75
0.91
0.95
1.01
Return on average stockholders' equity (2)
5.2
4.2
4.8
4.8
5.0
Return on average tangible stockholders' equity (2)
9.3
7.4
8.3
8.3
8.5
Operating return on average tangible
stockholders' equity (1), (2)
9.3
8.1
8.6
8.6
8.9
Efficiency ratio (1)
62.7
64.1
63.0
61.4
61.4
Common Share Data:
Basic and diluted earnings per share
$ 0.20
$ 0.16
$ 0.18
$ 0.18
$ 0.19
Operating earnings per share (1)
0.20
0.18
0.19
0.19
0.20
Dividends paid per share
0.1625
0.16
0.16
0.16
0.16
Dividend payout ratio
83.6%
100.6%
87.4%
87.3%
85.4%
Operating dividend payout ratio (1)
83.2
91.2
84.8
84.3
82.2
Book value per share (end of period)
$ 15.11
$ 15.24
$ 15.21
$ 15.20
$ 15.09
Tangible book value per share (end of period) (1)
8.20
8.54
8.71
8.77
8.72
Stock price:
High
15.00
13.61
12.50
12.55
13.50
Low
12.62
12.22
11.36
11.20
11.25
Close (end of period)
14.90
13.42
12.09
12.14
11.61
Common shares (end of period) (in millions)
309.59
320.65
331.27
335.95
340.33
Weighted average diluted common shares (in millions)
313.52
325.21
331.39
336.48
340.67
(1) See Non-GAAP financial measures and reconciliation to GAAP.
(2) Annualized.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
Six Months Ended
June 30,
(dollars in millions, except per share data)
2013
2012
Earnings Data:
Net interest income
$ 440.2
$ 468.8
Provision for loan losses
21.6
22.1
Non-interest income
169.0
148.1
Non-interest expense
417.8
414.3
Operating non-interest expense (1)
409.4
407.7
Income before income tax expense
169.8
180.5
Net income
114.6
121.9
Operating earnings (1)
120.3
126.3
Selected Statistical Data:
Net interest margin (2)
3.35%
3.97%
Operating net interest margin (1), (2)
3.35
3.93
Return on average assets (2)
0.75
0.88
Operating return on average assets (1), (2)
0.79
0.91
Return on average tangible assets (2)
0.81
0.96
Return on average stockholders' equity (2)
4.7
4.7
Return on average tangible stockholders' equity (2)
8.3
8.0
Operating return on average tangible
stockholders' equity (1), (2)
8.7
8.3
Efficiency ratio (1)
63.4
62.5
Common Share Data:
Basic and diluted earnings per share
$ 0.36
$ 0.36
Operating earnings per share (1)
0.38
0.38
Dividends paid per share
0.3225
0.3175
Dividend payout ratio
91.3%
90.3%
Operating dividend payout ratio (1)
87.0
87.1
Book value per share (end of period)
$ 15.11
$ 15.09
Tangible book value per share (end of period) (1)
8.20
8.72
Stock price:
High
15.00
13.79
Low
12.22
11.25
Close (end of period)
14.90
11.61
Common shares (end of period) (in millions)
309.59
340.33
Weighted average diluted common shares (in millions)
319.33
342.82
(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)
2013
2013
2012
2012
2012
Financial Condition Data:
General:
Total assets
$ 31,345
$ 30,598
$ 30,324
$ 28,576
$ 28,137
Loans
22,866
22,161
21,737
21,040
20,588
Securities
4,618
4,716
4,669
3,787
3,702
Short-term investments
120
127
131
64
73
Allowance for loan losses
186
187
188
186
180
Goodwill and other acquisition-related intangible assets
2,140
2,147
2,154
2,160
2,166
Deposits
21,982
21,792
21,751
21,363
21,458
Borrowings
3,626
2,849
2,386
1,524
960
Notes and debentures
639
659
659
160
160
Stockholders' equity
4,678
4,886
5,039
5,107
5,135
Total risk-weighted assets (1)
23,498
22,918
22,764
21,682
21,841
Non-performing assets (2)
281
285
290
294
295
Net loan charge-offs
10.8
13.1
10.0
9.4
13.5
Average Balances:
Loans
$ 22,369
$ 21,727
$ 21,211
$ 20,758
$ 20,514
Securities
4,557
4,548
3,867
3,608
2,964
Short-term investments
153
146
128
108
562
Total earning assets
27,079
26,421
25,206
24,474
24,040
Total assets
30,799
30,178
28,991
28,234
27,753
Deposits
21,835
21,558
21,557
21,372
21,190
Total funding liabilities
25,548
24,726
23,487
22,709
22,184
Stockholders' equity
4,825
5,005
5,107
5,161
5,188
Ratios:
Net loan charge-offs to average loans (annualized)
0.19%
0.24%
0.19%
0.18%
0.26%
Non-performing assets to originated loans,
real estate owned and repossessed assets (2)
1.33
1.42
1.48
1.59
1.67
Originated allowance for loan losses to:
Originated loans (2)
0.85
0.88
0.91
0.95
1.00
Originated non-performing loans (2)
71.8
70.6
70.3
66.0
65.6
Average stockholders' equity to average total assets
15.7
16.6
17.6
18.3
18.7
Stockholders' equity to total assets
14.9
16.0
16.6
17.9
18.3
Tangible stockholders' equity to tangible assets (3)
8.7
9.6
10.2
11.2
11.4
Total risk-based capital (1)
12.8
13.7
14.7
15.6
15.6
(1) Consolidated.
(2) Excludes acquired loans.
(3) See Non-GAAP financial measures and reconciliation to GAAP.
BRIDGEPORT, Conn., July 18, 2013 /PRNewswire/ -- People's United Financial, Inc