third quarter 2019 results - people's united bank · 1 net interest income on a fully taxable...
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Third Quarter 2019 Results
October 17, 2019
1
Forward-Looking Statement
Certain statements contained in this presentation are forward-looking in nature. These include all statements about
People's United Financial, Inc. (“People’s United”) 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’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 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 successful integration of acquisitions; and (10) changes in regulation resulting from or relating to financial
reform legislation. People's United does not undertake any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
21 Net interest income on a fully taxable equivalent basis was $356 million, an increase of $600,000 or <1%.
Third Quarter 2019 Overview
Net income of $135.1 million, or $0.33 per Common Share
Operating Earnings of $0.34 per Common Share
• Net interest income1 of $349 million, an increase of $1 million or <1%
• Net interest margin of 3.12%, unchanged despite declining interest rates
‒ Benefited from a 4 basis point reduction in deposit costs and new business yields remaining higher than the total loan portfolio yield
• Average loans of $38.3 billion, an increase of $88 million or <1%
• Period-end loans of $38.8 billion, an increase of $224 million or 1%
‒ Runoff of the transactional portion of the New York multifamily portfolio lowered balances by $89 million
‒ Planned reduction of residential mortgages lowered balances by $224 million
• Average deposits of $38.7 billion, a decrease of $554 million or 1%
• Period-end deposits of $38.6 billion, a decrease of $893 million or 2%
‒ Second quarter ending balances included a $500 million short-term commercial deposit, which was withdrawn in July as expected
• Non-interest income of $106 million, a decrease of <$1 million or <1%
• Non-interest expense (ex. merger-related related costs of $5 million) of $276 million, an increase of $5 million or 2%
• Efficiency ratio of 56.8%, an increase of 100 basis points
• Net loan charge-offs of 0.06%, an increase of 1 basis point
(Comparisons versus second quarter 2019, unless noted otherwise)
2Q 2019 Deposits Calendar Day Loans Borrowings Investments 3Q 2019
3
Net Interest Income1
($ in millions)
$348.1 $348.7
1 Net interest income on a fully taxable equivalent basis for 2Q 2019 and 3Q 2019 was $355.4 million and $356.0 million, respectively.
+$0.6 or <1%
Linked-Quarter Change
$5.4 $2.0
($3.7) ($1.7) ($1.4)
4
Net Interest Margin
2Q 2019 Deposits Calendar Day Loans Borrowings Investments 3Q 2019
3.12% 3.12%
Unchanged
Linked-Quarter Change
5 bps 2 bps
(4 bps) (2 bps) (1 bp)
Loans: Average Balances
5
$12,323 $12,195
$9,638 $10,059
$4,511 $4,641
$9,672 $9,393
$2,085 $2,029
2Q 2019 Commercial& Industrial
EquipmentFinance
ResidentialMortgage
CommercialReal Estate
Home Equity& Other Consumer
3Q 2019
Commercial Real Estate Commercial & Industrial Equipment Finance Residential Mortgage Home Equity & Other Consumer
$38,317
($ in millions)
$38,229
Linked-Quarter Change
Linked-quarter change+$88 million or <1%
$421
($279)
$130
($128) ($56)
6
Deposits: Average Balances
$17,347 $17,068
$8,606 $8,777
$8,264 $8,122
$4,994 $4,690
2Q 2019 Non-Interest Bearing Savings Interest-BearingChecking & Money Market
Time 3Q 2019
Interest-Bearing Checking & Money Market Non-Interest-Bearing Time Savings
($ in millions)
$38,657$39,211
Linked-Quarter Change
Linked-quarter change($554) million or (1%)
$171
($304) ($279) ($142)
7
Non-Interest Income($ in millions)
2Q 2019 CommercialBanking Lending
Fees
Insurance BankService Charges
OperatingLease Income
InvestmentManagement
Fees
CustomerInterest RateSwap Income
Other 3Q 2019
$106.3 $106.0
($0.3) or (<1%)
Linked-Quarter Change
$1.6 $1.6 $0.6
($2.0) ($2.6)
$0.3 $0.2
8
Non-Interest Expense($ in millions)
2Q 2019 Merger-RelatedCosts
Compensation& Benefits
RegulatoryAssessments
Professional &Outside Services
Occupancy& Equipment
Other 3Q 2019
$281.4$278.4
Ex. Merger-Related Expenses: +$4.5 or 2%
Linked-Quarter Change
($1.5)
$0.4
($2.5) ($1.2) ($0.2)
$8.0
9
Efficiency Ratio
56.7%
55.1%
57.3%
55.8%
56.8%
3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
Quarterly Trend
10
Asset Quality
1Non-performing assets (excluding acquired non-performing loans) as a percentage of originated loans plus all REO and repossessed assets; acquired non-performing loans excluded as risk of loss has been considered by virtue of (i) our estimate of acquisition-date fair value, (ii) the existence of an FDIC loss sharing agreement, and/or (iii) allowance for loan losses established subsequent to acquisition
Notes: Source: SNL FinancialTop 50 Banks represents the largest 50 banks by total assets in each respective quarter.
0.57 0.610.54 0.56 0.56
1.05
0.80
0.84 0.830.91 0.84
0.760.63
0.0
0.5
1.0
1.5
3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
0.09 0.09
0.060.05
0.06
0.12
0.17
0.10
0.160.16
0.23
0.17
0.22
0.0
0.1
0.2
0.3
3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
2Ex. acquired loan charge-offs, PBCT’s charge-off ratio was 0.05%, 0.02%, 0.04%, 0.07% & 0.07% in 3Q 2019, 2Q 2019, 1Q 2019, 4Q 2018 & 3Q 2018, respectively
PBCT Peer Group (Median) Top 50 Banks (Median)
PBCT Peer Group (Median) Top 50 Banks (Median)
Non-Performing Assets / Loans & REO (%)1
Net Charge-offs / Average Loans2
11
Returns
1.06%
1.11%
0.96%
1.04%
1.05%
3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
14.5%14.9%
13.0%
14.1% 14.0%
3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
Return on Average Assets Return on Average Tangible Common Equity
Returns calculated on an operating basis
14.4%1.03% 14.6%1.06%
14.4%
12
Capital Ratios
Sep. 30, 2018 Dec. 31, 2018 Mar. 31, 2019 Jun. 30, 2019 Sep. 30, 2019
People’s United Financial, Inc.
Tang. Com. Equity/Tang. Assets 7.6% 7.6% 7.7% 7.7% 7.8%
Tier 1 Leverage 8.7% 8.7% 8.8% 8.7% 8.7%
Common Equity Tier 1 10.3% 10.3% 10.2% 10.1% 10.1%
Tier 1 Risk-Based 11.0% 10.9% 10.8% 10.7% 10.7%
Total Risk-Based 12.8% 12.5% 12.4% 12.0% 12.0%
People’s United Bank, N.A.
Tier 1 Leverage 9.2% 9.0% 9.0% 8.9% 8.8%
Common Equity Tier 1 11.6% 11.4% 11.2% 11.0% 10.8%
Tier 1 Risk-Based 11.6% 11.4% 11.2% 11.0% 10.8%
Total Risk-Based 13.6% 13.2% 12.9% 12.4% 12.2%
13
Appendix
14
Interest Rate Risk Profile
1Yield curve twist pivot point is 18 month point on yield curve. Short End defined as overnight to 18 months.
Long End defined as terms greater than 18 months.
-4.2%
3.6%6.4%
8.9%
-4.0%
3.5%6.3%
8.8%
Down 100 Up 100 Up 200 Up 300
-1.7%
1.9%
-2.4%
1.8%
-1.6%
1.9%
-2.3%
1.7%
Short End -100 Short End +100 Long End -100 Long End +100
Immediate Parallel ShockEst. Change in NII
Yield Curve Twist1
Est. Change in NII
Sep. 30, 2019 Jun. 30, 2019
Net Interest Income (NII) Sensitivity
15
Loans By State
$6,891 $7,205 $7,546 $7,779 $7,781 $9,222 $8,979
$4,313 $4,728 $4,954 $5,363 $5,616
$6,212$8,673$4,381
$5,146$5,578
$5,762$7,378
$7,168
$7,136
$838$904
$1,155$1,503
$1,649
$1,921
$2,084
$1,827$1,828
$1,854$1,840
$1,790
$1,763
$1,750
$1,327 $1,364
$1,346 $1,371
$1,424
$1,471
$1,504
$896 $931
$964 $956
$949
$926
$891
$3,917
$4,486 $5,014
$5,171
$5,988
$6,558
$7,764
Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Sep. 30, 2019
Connecticut Massachusetts New York New Jersey Vermont New Hampshire Maine Other
$24,390
$26,592
$29,745
$32,575
$28,411
($ in millions, end of period balances)
State Breakdown
$35,241
$38,781
16
Deposits By State
$11,559 $14,768 $16,093 $17,072 $17,640
$20,230 $20,881
$3,132
$3,067$3,299
$3,357$4,013
$4,451$5,853
$2,913
$3,205$3,456
$3,527
$5,195
$5,371
$5,721
$2,694
$2,761
$2,966$3,083
$3,191
$3,140
$3,156
$1,370
$1,395
$1,531$1,616
$1,679
$1,710
$1,720
$889
$942
$1,072 $1,206
$1,338
$1,257
$1,243
Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Sep. 30, 2019
Connecticut Massachusetts New York Vermont New Hampshire Maine
$22,557
$26,138
$29,861
$33,056
$28,417
($ in millions, end of period balances)
State Breakdown
$36,159
$38,574
17
Asset QualityOriginated Portfolio Coverage Detail as of September 30, 2019
Note – ALLLs: Commercial: $213 million, Retail: $29 million, Total: $242 million.
0.89%
0.35%
0.75%
Commercial Retail Total
0.44%
0.61%
0.48%
Commercial Retail Total
205%
57%
156%
Commercial Retail Total
ALLLs / Loans NPLs / Loans ALLLs / NPLs
18
Peer Group
Firm Ticker City State
1 Associated Banc-Corp ASB Green Bay WI
2 BankUnited Inc. BKU Miami Lakes FL
3 Citizens Financial Group, Inc. CFG Providence RI
4 Comerica Inc. CMA Dallas TX
5 First Horizon National Corp. FHN Memphis TN
6 F.N.B. Corp. FNB Pittsburgh PA
7 Huntington Bancshares, Inc. HBAN Columbus OH
8 KeyCorp KEY Cleveland OH
9 M&T Bank Corp. MTB Buffalo NY
10 New York Community Bancorp NYCB Westbury NY
11 Signature Bank SBNY New York NY
12 Sterling Bancorp STL Montebello NY
13 Valley National Bancorp VLY Wayne NJ
14 Webster Financial Corp. WBS Waterbury CT
15 Zions Bancorp. ZION Salt Lake City UT
