January 15, 2015

PEOPLE'S UNITED FINANCIAL REPORTS FOURTH QUARTER NET INCOME AND OPERATING EARNINGS OF $0.22 PER SHARE

Click here to see the fourth quarter Financial Schedule.

BRIDGEPORT, CT – People's United Financial, Inc. (NASDAQ: PBCT) today reported net income of $64.7 million, or $0.22 per share, for the fourth quarter of 2014, compared to $59.3 million, or $0.20 per share, for the fourth quarter of 2013, and $61.6 million, or $0.21 per share, for the third quarter of 2014. Operating earnings were $65.1 million, or $0.22 per share, for the fourth quarter of 2014, compared to $60.0 million, or $0.20 per share, for the fourth quarter of 2013, and $63.0 million, or $0.21 per share, for the third quarter of 2014.

For the year ended December 31, 2014, net income totaled $251.7 million, or $0.84 per share, compared to $232.4 million, or $0.74 per share, for 2013. Operating earnings were $244.5 million, or $0.82 per share, for 2014, compared to $241.1 million, or $0.77 per share, for 2013. For 2014, operating earnings exclude a net after-tax gain of $13.4 million ($0.04 per share) resulting from the formation of a merchant services joint venture as well as non-operating expenses of $6.2 million after-tax ($0.02 per share).

The Company's Board of Directors declared a $0.165 per share quarterly dividend, payable February 15, 2015 to shareholders of record on February 1, 2015. Based on the closing stock price on January 14, 2015, the dividend yield on People's United Financial common stock is 4.6 percent.

“We are pleased to report an increase in full-year operating earnings per share for the fifth consecutive year, especially in light of the persistently low interest rate environment,” commented Jack Barnes, President and Chief Executive Officer. “Our performance in 2014 demonstrates the benefits of our deep customer relationships, product breadth and ongoing strategic initiatives. We continued to build on the momentum generated in recent years by once again achieving meaningful growth in loans and deposits.”

Barnes continued, “Looking forward to 2015, our businesses are well positioned in attractive markets and we are optimistic about further growth opportunities. We look to sustain momentum through continued investments in talent, products and services, as well as disciplined execution across each business. We remain committed to successfully building this organization for the long-term and delivering value to both customers and shareholders.”

“Our 2014 financial results reflected ongoing revenue growth and effective expense management,” stated David Rosato, Senior Executive Vice President and Chief Financial Officer. “We achieved strong annual loan and organic deposit growth of nine percent and five percent respectively, while maintaining superior asset quality metrics. Net interest income, driven primarily by continued strong loan originations, increased three percent from the prior year, despite a challenging interest rate and economic environment.”

Rosato concluded, “We were particularly pleased to maintain flat operating expenses for the year considering the continued impact of strategic investments and increasing regulatory compliance costs. Our ability to grow revenues and control costs resulted in improved operating leverage and remains an important area of focus for the organization.”

Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.13 percent in the fourth quarter of 2014, consistent with the third quarter of 2014 and improved from 0.18 percent in the fourth quarter of 2013. For the full-year of 2014, net loan charge-offs were 0.12 percent of average total loans compared to 0.19 percent in 2013. For the originated loan portfolio, non-performing loans equaled 0.77 percent of loans at December 31, 2014, compared to 0.79 percent at September 30, 2014 and 0.95 percent at December 31, 2013.

Operating return on average assets of 0.75 percent for the fourth quarter of 2014 improved from 0.74 percent in the third quarter of 2014 and was consistent with the fourth quarter of 2013. Operating return on average tangible stockholders' equity was 10.1 percent for the fourth quarter of 2014, compared to 9.9 percent for the third quarter of 2014 and 9.8 percent for the fourth quarter of 2013.

At December 31, 2014, People's United Financial's tier 1 common and total risk-based capital ratios were 9.8 percent and 12.2 percent, respectively, and the tangible equity ratio stood at 7.5 percent. People's United Bank's tier 1 and total risk-based capital ratios were 10.5 percent and 13.1 percent, respectively, at December 31, 2014.

People's United Financial, a diversified financial services company with $36 billion in assets, provides commercial and retail banking, as well as wealth management services through a network of over 400 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 $16.4 billion at December 31, 2014 compared to $16.2 billion at September 30, 2014.

 

4Q 2014 Financial Highlights

Summary

  • Net income was $64.7 million, or $0.22 per share.
    • Operating earnings were $65.1 million, or $0.22 per share.
  • Net interest income totaled $228.1 million in 4Q14 compared to $228.5 million in 3Q14.
    • Interest income on acquired loans decreased $1.9 million to $17.0 million.
  • Net interest margin decreased five basis points from 3Q14 to 3.00%.
    • The effect of new loan volume at rates lower than the existing portfolio reduced the margin by five basis points.
  • Provision for loan losses totaled $9.9 million.
    • Net loan charge-offs totaled $8.5 million, of which $4.0 million related to loans with previously-established specific reserves.
    • Net loan charge-off ratio of 0.13% in 4Q14.
    • Reflects a $7.1 million increase in the originated allowance for loan losses due to loan growth and a $1.7 million allowance reversal related to acquired loans.
  • Non-interest income was $86.8 million in 4Q14 compared to $84.0 million in 3Q14.
    • Net security gains increased $2.5 million.
    • Customer interest rate swap income increased $1.4 million.
    • Insurance revenue decreased $2.2 million, primarily reflecting the seasonal nature of insurance renewals.
    • Bank service charges decreased $1.3 million.
    • Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled $10.8 billion and $5.6 billion, respectively, at December 31, 2014, compared to $10.7 billion and $5.5 billion, respectively, at September 30, 2014.
  • Non-interest expense totaled $207.7 million in 4Q14 compared to $208.8 million in 3Q14.
    • Operating non-interest expense was $207.1 million in 4Q14 compared to $206.7 million in 3Q14.
    • Regulatory assessments expense increased $0.9 million and professional and outside services expense increased $0.4 million.
    • The efficiency ratio in 4Q14 improved to 61.3% from 61.4% in 3Q14, reflecting an increase in adjusted total revenues.
    • Non-operating expenses totaled $0.6 million in 4Q14 compared to $2.1 million in 3Q14.
  • Effective income tax rate was 33.5% for 4Q14 and 33.9% for the full-year of 2014, compared to 33.1% for the full-year of 2013 (33.2% for 4Q13).

Commercial Banking

  • Commercial banking loans increased $437 million, or 9% annualized, from September 30, 2014.
  • Average commercial banking loans totaled $19.1 billion in 4Q14, an increase of $268 million, or 6% annualized, from 3Q14.
  • The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 0.76% at both December 31, 2014 and September 30, 2014.
    • Non-performing commercial banking assets, excluding acquired non-performing loans, totaled $154.9 million at December 31, 2014 compared to $154.0 million at
      September 30, 2014.
  • Net loan charge-offs totaled $6.5 million, or 0.14% annualized, of average commercial banking loans in 4Q14, compared to $5.9 million, or 0.13% annualized, in 3Q14.
  • For the originated commercial banking portfolio, the allowance for loan losses as a percentage of loans was 0.91% at December 31, 2014 compared to 0.92% at September 30, 2014.
  • The commercial banking originated allowance for loan losses represented 120% of originated non-performing commercial banking loans at both December 31, 2014 and September 30, 2014.
  • Commercial deposits totaled $7.2 billion at December 31, 2014 compared to $7.0 billion at September 30, 2014.

Retail Banking

  • Residential mortgage loans increased $192 million, or 16% annualized, from September 30, 2014.
    • Average residential mortgage loans totaled $4.9 billion in 4Q14, an increase of $238 million, or 21% annualized, from 3Q14.
    • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.80% at December 31, 2014 compared to 0.93% at September 30, 2014.
    • Net loan charge-offs totaled $0.2 million, or 0.02% annualized, of average residential mortgage loans in 4Q14, compared to $0.7 million, or 0.06% annualized, in 3Q14.
  • Home equity loans increased $10 million, or 2% annualized, from September 30, 2014.
    • Average home equity loans totaled $2.1 billion in 4Q14, an increase of $19 million, or 4% annualized, from 3Q14.
    • The ratio of originated non-performing home equity loans to originated home equity loans was 0.85% at December 31, 2014 compared to 0.80% at September 30, 2014.
    • Net loan charge-offs totaled $1.3 million, or 0.24% annualized, of average home equity loans in 4Q14, compared to $1.2 million, or 0.24% annualized, in 3Q14.
  • Retail deposits (excluding brokered deposits) totaled $16.3 billion at December 31, 2014 compared to $16.0 billion at September 30, 2014.

 

Other Media Resources


JOIN OUR NEWSLETTER