U.S. Markets closed

People's United Financial Reports First Quarter Net Income of $114.6 Million, or $0.30 per Common Share

Operating Earnings of $0.33 per Common Share

Announces Increase in the Common Dividend to an Annual Rate of $0.71 Per Share

- Completed the acquisition of BSB Bancorp on April 1st.

- Results include merger-related expenses of $15.0 million ($11.9 million after-tax), or $0.03 per common share.

- Efficiency ratio of 57.3 percent, an improvement of 210 basis points from a year ago, reflecting higher revenues and well-controlled expenses.

- Net interest margin of 3.20 percent, expanded three basis points linked-quarter.

- Strong deposit growth as period-end balances increased $742 million or two percent from year-end.

BRIDGEPORT, Conn., April 18, 2019 /PRNewswire/ -- People's United Financial, Inc. (PBCT) today reported results for the first quarter 2019. These results along with comparison periods are summarized below:


($ in millions, except per common share data)









 Three Months Ended





Mar. 31, 2019


Dec. 31, 2018


Mar. 31, 2018











Net income


$         114.6


$         132.9


$         107.9


Net income available


111.1


129.4


104.4



to common shareholders






Per common share


0.30


0.35


0.30











Operating earnings1


123.0


134.2


104.4



Per common share


0.33


0.36


0.30




















Net interest income


$         332.8


$         332.6


$         295.8



Net interest margin


3.20%


3.17%


3.05%











Non-interest income1


94.6


88.7


90.4




















Non-interest expense


$         277.2


$         262.7


$         243.5


Operating non-interest expense1

262.2


254.7


243.5











Efficiency ratio


57.3%


55.1%


59.4%




















Average balances








Loans


$       35,046


$       35,016


$       32,096


Deposits


36,450


35,959


32,824











Period-end balances








Loans


35,515


35,241


32,104


Deposits


36,901


36,159


32,894











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





"We are pleased with our first quarter performance and continued success enhancing profitability," said Jack Barnes, Chairman and Chief Executive Officer. "Operating earnings of $123 million grew 18 percent from a year ago and operating return on average tangible common equity of 14.4 percent improved 60 basis points. Total revenues increased 11 percent year-over-year due to both higher net interest income and non-interest income. The quarter benefited from the First Connecticut acquisition and further net interest margin expansion primarily resulting from higher yields on new business. With the acquisition of BSB Bancorp complete, we are excited to leverage our expanded customer and employee base to build upon our strong organic growth in Massachusetts, particularly in the Greater Boston area. Integration has gone very well, core systems conversion will take place in the third quarter, and we remain confident in achieving the transaction's attractive financial returns. In addition, we are proud to announce an increase to our common dividend for the 26th consecutive year, which demonstrates our commitment to deliver shareholder value through a consistent return of capital."

"In what is typically a seasonally slower quarter for loan growth, total period-end loans increased one percent from year-end," said David Rosato, Senior Executive Vice President and Chief Financial Officer. "Solid results across C&I businesses and equipment finance more than offset lower commercial real estate balances, reflecting the importance of our portfolio's diversification. We are encouraged with our ongoing success gathering deposits as period-end balances were up two percent during the quarter, lowering the loan-to-deposit ratio to 96 percent. Asset quality was once again exceptional in each of our portfolios as net charge-offs of six basis points improved linked-quarter from an already low level. While the credit environment has continued to be benign for an extended period, we remain committed to our conservative and well-defined approach to underwriting that has served us well for many years."






















 As of and for the Three Months Ended





Mar. 31, 2019


Dec. 31, 2018


Mar. 31, 2018











Asset Quality

















Net loan charge-offs 


0.06%


0.09%


0.06%


       to average total loans





Originated non-performing loans


0.49%


0.55%


0.52%


as a percentage of originated loans























Returns

















Return on average assets1


0.96%


1.11%


0.98%


Return on average tangible common equity1

13.0%


14.9%


13.8%




















Capital Ratios

















People's United Financial, Inc.








Tangible common equity / tangible assets

7.7%


7.6%


7.3%


Tier 1 leverage


8.8%


8.7%


8.5%


Common equity tier 1 


10.2%


10.3%


10.1%


Tier 1 risk-based


10.8%


10.9%


10.8%


Total risk-based 


12.4%


12.5%


12.6%











People's United Bank, N.A.








Tier 1 leverage



9.0%


9.0%


8.6%


Common equity tier 1 



11.2%


11.4%


11.0%


Tier 1 risk-based



11.2%


11.4%


11.0%


Total risk-based 



12.9%


13.2%


12.9%











1See Non-GAAP Financial Measures and Reconciliation to GAAP



The Company's Board of Directors voted to increase the common stock dividend to an annual rate of $0.71 per share.  Based on the closing stock price on April 17, 2019, the dividend yield on People's United Financial common stock is 4.1 percent. The quarterly dividend of $0.1775 per share is payable May 15, 2019 to shareholders of record on May 1, 2019.

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 more than $48 billion in assets. Founded in 1842, People's United Bank offers commercial and retail banking through a network of over 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine, as well as wealth management and insurance solutions. The company also provides specialized commercial services to customers nationwide.

1Q 2019 Financial Highlights

Summary

  • Net income totaled $114.6 million, or $0.30 per common share.
  • Net interest income totaled $332.8 million in 1Q19 compared to $332.6 million in 4Q18.
  • Net interest margin increased three basis points from 4Q18 to 3.20% reflecting:
  • Provision for loan losses totaled $5.6 million.
  • Non-interest income totaled $94.6 million in 1Q19 compared to $88.7 million in 4Q18.
  • Non-interest expense totaled $277.2 million in 1Q19 compared to $262.7 million in 4Q18.
  • The effective income tax rate was 20.8% for 1Q19 and 18.8% for the full-year of 2018.

Commercial Banking

  • Commercial loans totaled $25.4 billion at March 31, 2019, an increase of $334 million from December 31, 2018.
  • Average commercial loans totaled $24.9 billion in 1Q19, an increase of $108 million from 4Q18.
  • Commercial deposits totaled $13.5 billion at March 31, 2019 compared to $13.1 billion at December 31, 2018.
  • The ratio of originated non-performing commercial loans to originated commercial loans was 0.45% at March 31, 2019 compared to 0.52% at December 31, 2018.
  • Non-performing commercial assets, excluding acquired non-performing loans, totaled $111.1 million at March 31, 2019 compared to $126.1 million at December 31, 2018.
  • For the originated commercial loan portfolio, the allowance for loan losses as a percentage of loans was 0.91% at March 31, 2019 compared to 0.93% at December 31, 2018.
  • The originated commercial allowance for loan losses represented 202% of originated non-performing commercial loans at March 31, 2019 compared to 181% at December 31, 2018.

Retail Banking

  • Residential mortgage loans totaled $8.2 billion at March 31, 2019, an increase of $9 million from December 31, 2018.
  • Home equity loans totaled $1.9 billion at March 31, 2019, a decrease of $67 million from December 31, 2018.
  • Retail deposits totaled $23.4 billion at March 31, 2019 compared to $23.1 billion at December 31, 2018.
  • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.52% at March 31, 2019 compared to 0.57% at December 31, 2018.
  • The ratio of originated non-performing home equity loans to originated home equity loans was 0.81% at March 31, 2019 compared to 0.85% at December 31, 2018.

Conference Call

On April 18, 2019, 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, 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 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



March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,


(dollars in millions, except per common share data)


2019


2018


2018


2018


2018


Earnings Data:












  Net interest income (fully taxable equivalent)

$

340.0

$

339.5

$

313.0

$

307.8

$

302.1


  Net interest income 


332.8


332.6


306.4


301.2


295.8


  Provision for loan losses


5.6


9.9


8.2


6.5


5.4


  Non-interest income (1)


94.6


88.7


92.3


94.9


90.4


  Non-interest expense (1)


277.2


262.7


241.3


248.6


243.5


  Income before income tax expense


144.6


148.7


149.2


141.0


137.3


  Net income


114.6


132.9


117.0


110.2


107.9


  Net income available to common shareholders (1)


111.1


129.4


113.5


106.7


104.4














Selected Statistical Data:












  Net interest margin (2)


3.20

%

3.17

%

3.15

%

3.10

%

3.05

%

  Return on average assets (1), (2)


0.96


1.11


1.06


1.00


0.98


  Return on average common equity (2)


7.0


8.3


8.0


7.6


7.5


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


13.0


14.9


14.5


13.9


13.8


  Efficiency ratio (1)


57.3


55.1


56.7


58.4


59.4














Common Share Data:












  Earnings per common share: 












    Basic

$

0.30

$

0.35

$

0.33

$

0.31

$

0.31


    Diluted (1)


0.30


0.35


0.33


0.31


0.30


  Dividends paid per common share


0.1750


0.1750


0.1750


0.1750


0.1725


  Common dividend payout ratio (1)


58.6

%

50.3

%

52.9

%

56.2

%

56.3

%

  Book value per common share (end of period)

$

17.13

$

16.95

$

16.69

$

16.56

$

16.43


  Tangible book value per common share (end of period) (1)


9.35


9.23


9.19


9.02


8.93


  Stock price:












    High


18.03


17.46


19.00


19.37


20.26


    Low


14.25


13.66


16.95


18.00


18.18


    Close (end of period)


16.44


14.43


17.12


18.09


18.66


  Common shares (end of period) (in millions)


372.18


371.02


342.36


341.59


341.01


  Weighted average diluted common shares (in millions)

374.09


372.83


345.04


344.47


344.00














(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



March 31,


Dec. 31,


Sept. 30,


June 30,


March 31, 


(dollars in millions)


2019


2018


2018


2018


2018


Financial Condition Data:












    Total assets

$

48,092

$

47,877

$

44,133

$

44,575

$

44,101


    Loans 


35,515


35,241


32,199


32,512


32,104


    Securities


7,175


7,233


7,385


7,324


7,173


    Short-term investments


106


266


128


253


470


    Allowance for loan losses


241


240


238


237


235


    Goodwill and other acquisition-related intangible assets

2,896


2,866


2,569


2,574


2,555


    Deposits


36,901


36,159


33,210


32,468


32,894


    Borrowings


2,860


3,593


3,392


4,639


3,877


    Notes and debentures


902


896


886


889


892


    Stockholders' equity


6,621


6,534


5,959


5,900


5,845


    Total risk-weighted assets (1):












       People's United Financial, Inc.


36,479


35,910


33,181


33,369


32,833


       People's United Bank, N.A.


36,461


35,875


33,132


33,317


32,784


    Non-performing assets (2)


167


186


173


187


174


    Net loan charge-offs


5.1


7.5


7.0


5.0


4.5














Average Balances:












    Loans

$

35,046

$

35,016

$

32,166

$

32,116

$

32,096


    Securities (3)


7,311


7,479


7,404


7,302


7,186


    Short-term investments


203


292


193


267


366


    Total earning assets


42,560


42,786


39,763


39,685


39,648


    Total assets


47,800


47,721


44,245


44,110


44,011


    Deposits


36,450


35,959


33,058


32,535


32,824


    Borrowings


2,937


3,456


3,539


4,031


3,752


    Notes and debentures


896


886


888


890


895


    Total funding liabilities


40,284


40,302


37,485


37,456


37,471


    Stockholders' equity


6,562


6,515


5,937


5,870


5,820














Ratios:












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

0.06

%

0.09

%

0.09

%

0.06

%

0.06

%

    Non-performing assets to originated loans,












      real estate owned and repossessed assets (2)


0.54


0.61


0.57


0.62


0.58


    Originated allowance for loan losses to:












      Originated loans (2)


0.76


0.77


0.78


0.77


0.78


      Originated non-performing loans (2)


157.0


140.9


147.9


138.4


149.3


    Average stockholders' equity to average total assets


13.7


13.7


13.4


13.3


13.2


    Stockholders' equity to total assets


13.8


13.6


13.5


13.2


13.3


    Tangible common equity to tangible assets (4)


7.7


7.6


7.6


7.3


7.3


    Total risk-based capital (1):












       People's United Financial, Inc.


12.4


12.5


12.8


12.5


12.6


       People's United Bank, N.A.


12.9


13.2


13.6


13.4


12.9














(1) March 31, 2019 amounts and ratios are preliminary.


(2) Excludes acquired loans.

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

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


 

 

People's United Financial, Inc.




CONSOLIDATED STATEMENTS OF CONDITION









March 31,

Dec. 31,

March 31,

(in millions)

2019

2018

2018

Assets




Cash and due from banks

$        508.5

$        665.7

$        402.2

Short-term investments

106.0

266.3

470.3

Securities:




  Trading debt securities, at fair value

8.3

8.4

8.2

  Equity securities, at fair value

8.2

8.1

9.5

  Debt securities available-for-sale, at fair value 

3,060.0

3,121.0

3,153.8

  Debt securities held-to-maturity, at amortized cost

3,823.4

3,792.3

3,696.3

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

275.6

303.4

305.2

    Total securities

7,175.5

7,233.2

7,173.0

Loans held-for-sale

7.8

19.5

10.4

Loans: 




  Commercial real estate

11,591.2

11,649.6

10,810.4

  Commercial and industrial

9,354.7

9,088.9

8,574.1

  Equipment financing

4,466.1

4,339.2

3,887.9

    Total Commercial Portfolio

25,412.0

25,077.7

23,272.4

  Residential mortgage

8,163.1

8,154.2

6,834.2

  Home equity and other consumer

1,940.1

2,009.5

1,997.8

    Total Retail Portfolio

10,103.2

10,163.7

8,832.0

    Total loans

35,515.2

35,241.4

32,104.4

  Less allowance for loan losses

(240.9)

(240.4)

(235.3)

    Total loans, net

35,274.3

35,001.0

31,869.1

Goodwill and other acquisition-related intangible assets

2,896.5

2,865.7

2,554.9

Bank-owned life insurance

467.8

467.0

406.0

Premises and equipment, net

255.8

267.3

250.0

Other assets

1,399.7

1,091.6

964.6

    Total assets

$  48,091.9

$  47,877.3

$  44,100.5





Liabilities




Deposits: 




  Non-interest-bearing

$    8,315.6

$    8,543.0

$    7,938.6

  Savings

4,159.1

4,116.5

4,442.1

  Interest-bearing checking and money market

17,130.0

16,583.3

15,257.6

  Time

7,296.2

6,916.2

5,255.5

    Total deposits

36,900.9

36,159.0

32,893.8

Borrowings:




  Federal Home Loan Bank advances

1,573.2

2,404.5

2,610.7

  Federal funds purchased

1,020.0

845.0

805.0

  Customer repurchase agreements

264.8

332.9

265.8

  Other borrowings

1.6

11.0

195.4

    Total borrowings

2,859.6

3,593.4

3,876.9

Notes and debentures

901.6

895.8

891.9

Other liabilities

808.6

695.2

592.4

    Total liabilities

41,470.7

41,343.4

38,255.0





Stockholders' Equity




Preferred stock

244.1

244.1

244.1

Common stock

4.7

4.7

4.4

Additional paid-in capital 

6,558.8

6,549.3

6,029.0

Retained earnings

1,328.6

1,284.8

1,121.4

Unallocated common stock of Employee Stock Ownership Plan, at cost

(128.3)

(130.1)

(135.5)

Accumulated other comprehensive loss

(224.6)

(256.8)

(255.8)

Treasury stock, at cost

(1,162.1)

(1,162.1)

(1,162.1)

    Total stockholders' equity

6,621.2

6,533.9

5,845.5

    Total liabilities and stockholders' equity

$  48,091.9

$  47,877.3

$  44,100.5


 

People's United Financial, Inc.










CONSOLIDATED STATEMENTS OF INCOME





















Three Months Ended


March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,

(in millions, except per common share data)

2019


2018


2018


2018


2018

Interest and dividend income:










  Commercial real estate

$  132.7


$  130.2


$  114.7


$  111.5


$     107.0

  Commercial and industrial

103.9


100.1


93.2


90.1


82.3

  Equipment financing

59.0


56.7


56.2


50.5


48.9

  Residential mortgage

70.7


70.2


56.0


55.3


54.7

  Home equity and other consumer

24.9


24.4


22.0


21.4


20.8

    Total interest on loans

391.2


381.6


342.1


328.8


313.7

  Securities

47.8


48.5


46.6


45.1


44.0

  Short-term investments

1.3


1.4


1.1


1.3


1.2

  Loans held-for-sale

0.2


0.3


0.2


0.2


0.2

    Total interest and dividend income

440.5


431.8


390.0


375.4


359.1

Interest expense:










  Deposits 

81.2


70.6


56.9


47.3


41.3

  Borrowings 

17.7


20.0


18.2


18.5


14.2

  Notes and debentures

8.8


8.6


8.5


8.4


7.8

    Total interest expense

107.7


99.2


83.6


74.2


63.3

    Net interest income

332.8


332.6


306.4


301.2


295.8

Provision for loan losses 

5.6


9.9


8.2


6.5


5.4

    Net interest income after provision for loan losses

327.2


322.7


298.2


294.7


290.4

Non-interest income:










  Bank service charges

25.2


26.9


24.9


24.3


23.8

  Investment management fees

16.5


16.4


17.4


17.2


17.7

  Operating lease income

12.7


12.0


11.0


11.2


10.7

  Insurance revenue

10.5


6.7


9.8


8.3


9.8

  Commercial banking lending fees

7.8


9.6


7.9


9.4


10.4

  Cash management fees

6.8


6.6


7.0


7.0


6.6

  Brokerage commissions

2.8


3.3


3.2


3.2


3.1

  Customer interest rate swap income, net

2.3


6.3


2.8


4.0


1.5

  Net security (losses) gains (1)

-


(10.0)


0.1


-


0.1

  Other non-interest income

10.0


10.9


8.2


10.3


6.7

    Total non-interest income

94.6


88.7


92.3


94.9


90.4

Non-interest expense:










  Compensation and benefits 

155.4


151.5


135.7


135.0


140.7

  Occupancy and equipment 

44.3


44.6


41.6


40.8


41.2

  Professional and outside services

20.0


21.4


17.0


20.6


18.6

  Operating lease expense

9.4


9.8


8.9


8.7


9.0

  Regulatory assessments

7.0


7.4


10.0


9.9


10.6

  Amortization of other acquisition-related intangible assets

6.7


6.9


4.9


4.9


5.1

  Other non-interest expense 

34.4


21.1


23.2


28.7


18.3

    Total non-interest expense (1)

277.2


262.7


241.3


248.6


243.5

    Income before income tax expense

144.6


148.7


149.2


141.0


137.3

Income tax expense (1)

30.0


15.8


32.2


30.8


29.4

    Net income

114.6


132.9


117.0


110.2


107.9

Preferred stock dividend

3.5


3.5


3.5


3.5


3.5

    Net income available to common shareholders

$   111.1


$   129.4


$   113.5


$   106.7


$     104.4











Earnings per common share:










  Basic

$     0.30


$     0.35


$     0.33


$     0.31


$      0.31

  Diluted

0.30


0.35


0.33


0.31


0.30











(1) Includes $10.0 million of security losses for the three months ended December 31, 2018, which are considered non-operating,

     incurred as a tax planning strategy in response to tax reform-related benefits recognized in the period. Total non-interest 

     expense includes $15.0 million, $8.0 million, $0.5 million and $2.9 million of non-operating expenses for the three months ended

     March 31, 2019,  December 31, 2018, September 30, 2018 and June 30, 2018, respectively.  Income tax expense includes a 

     $9.2 million benefit recognized in connection with tax reform, which is considered non-operating, for the three months ended

     December 31, 2018.  See Non-GAAP Financial Measures and Reconciliation to GAAP.


 

People's United Financial, Inc.












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




















March 31, 2019


December 31, 2018


March 31, 2018

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

$        202.8

$      1.3

2.60%


$        291.6

$      1.4

2.02%


$        366.4

$      1.2

1.35%

Securities (2)

7,310.6

52.4

2.87


7,478.7

52.9

2.83


7,186.1

48.0

2.67

Loans:












  Commercial real estate

11,588.3

132.7

4.58


11,688.1

130.2

4.45


10,934.2

107.0

3.91

  Commercial and industrial

8,974.0

106.5

4.74


8,880.3

102.6

4.62


8,418.6

84.6

4.02

  Equipment financing

4,357.7

59.0

5.42


4,243.2

56.7

5.34


3,870.6

48.9

5.06

  Residential mortgage

8,153.6

70.9

3.48


8,165.4

70.5

3.46


6,837.1

54.9

3.21

  Home equity and other consumer

1,972.9

24.9

5.05


2,038.5

24.4

4.80


2,035.0

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