April 16, 2015

People's United Financial Reports First Quarter Net Income of $.20 per share and Operating Earnings of $0.21 Per Share; Announces Dividend Increase

Click here for to see first quarter Financial Schedule

BRIDGEPORT, CT – People's United Financial, Inc. (NASDAQ: PBCT) today reported net income of $59.2 million, or $0.20 per share, for the first quarter of 2015, compared to $53.1 million, or $0.18 per share, for the first quarter of 2014, and $64.7 million, or $0.22 per share, for the fourth quarter of 2014. Operating earnings were $63.2 million, or $0.21 per share, for the first quarter of 2015, compared to $56.5 million, or $0.19 per share, for the first quarter of 2014, and $65.1 million, or $0.22 per share, for the fourth quarter of 2014.

The Company's Board of Directors voted to increase the common stock dividend to an annual rate of $0.67 per share. Based on the closing stock price on April 15, 2015, the dividend yield on People's United Financial common stock is 4.4 percent. The quarterly dividend of $0.1675 per share is payable May 15, 2015 to shareholders of record on May 1, 2015.

"Our performance this quarter is an encouraging start to the year, especially given the persistent low interest rate environment as well as the severe winter weather across our markets," commented Jack Barnes, President and Chief Executive Officer. "We are pleased our continued focus on improving profitability led to a 12 percent increase in operating earnings from a year ago. While the first quarter is typically a seasonally slower period, we achieved solid annualized loan growth of five percent and the success of our deposit gathering initiatives drove annualized organic deposit growth of over 17 percent."

Barnes continued, "Additionally, as previously reported we received a national banking association charter during the quarter. This charter is best aligned to our commercial banking business model."

Barnes concluded, "Finally, we are pleased to announce our 22nd consecutive annual dividend increase which reflects our continued commitment to delivering value for shareholders through a consistent return of capital."

 "The first quarter results reflect our continued focus on improving operating leverage through revenue growth and effective expense management," stated David Rosato, Senior Executive Vice President and Chief Financial Officer. "Revenues grew three percent from the prior year quarter mostly due to higher non-interest income, while operating expenses remained flat.  The net interest margin decline from the fourth quarter was in line with expectations and primarily resulted from the impact of two fewer calendar days and continued strong loan originations at rates lower than the existing portfolio."

Rosato concluded, "We are comfortable with our capital structure and balance sheet strength.  Asset quality was once again exceptional as net charge-offs improved from an already low level.  Capital ratios continue to be strong, especially in light of the Company's low risk business model."

At March 31, 2015, People's United Financial's common equity tier 1 capital and total risk-based capital ratios were 10.0 percent and 12.0 percent, respectively, and the tangible equity ratio stood at 7.5 percent.  People's United Bank N.A.'s common equity tier 1 capital and total risk-based capital ratios were 10.6 percent and 13.0 percent, respectively, at March 31, 2015.

Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.11 percent in the first quarter of 2015, an improvement from 0.13 percent in the fourth quarter of 2014 and
0.12 percent in the first quarter of 2014.  For the originated loan portfolio, non-performing loans equaled 0.68 percent of loans at March 31, 2015, compared to 0.77 percent at December 31, 2014 and 0.84 percent at March 31, 2014.

Operating return on average assets of 0.71 percent for the first quarter of 2015 declined from
0.75 percent in the fourth quarter of 2014, but improved from 0.69 percent in the first quarter of 2014.  Operating return on average tangible stockholders' equity of 9.9 percent in the first quarter of 2015 declined from 10.1 percent in the fourth quarter of 2014, but improved from 9.3 percent in the first quarter of 2014.

People's United Financial, a diversified financial services company with over $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 $15.7 billion at March 31, 2015 compared to $16.4 billion at
December 31, 2014.

 

1Q 2015 Financial Highlights

Summary

  • Net income was $59.2 million, or $0.20 per share.
    • Operating earnings were $63.2 million, or $0.21 per share.
  • Net interest income totaled $228.1 million in both 1Q15 and 4Q14.
    • Interest income on acquired loans decreased $1.7 million to $15.3 million.
  • Net interest margin decreased nine basis points from 4Q14 to 2.91% reflecting:
    • Two fewer calendar days in 1Q15 (decrease of five basis points).
    • New loan volume at rates lower than the existing portfolio (decrease of two basis points).
    • Increase in average investment and deposit balances (decrease of two basis points).
  • Provision for loan losses totaled $9.8 million.
    • Net loan charge-offs totaled $7.2 million, of which $3.2 million related to loans with previously-established specific reserves.
    • Net loan charge-off ratio of 0.11% in 1Q15.
    • Reflects a $6.2 million increase in the originated allowance for loan losses due to loan growth and a $0.4 million allowance reversal related to acquired loans.
  • Non-interest income was $89.0 million in 1Q15 compared to $86.8 million in 4Q14.
    • Commercial banking lending fees increased $3.7 million.
    • Net gains on sales of acquired loans increased $2.2 million
    • Customer interest rate swap income increased $2.1 million.
    • Insurance revenue increased $1.0 million, primarily reflecting the seasonal nature of insurance renewals.
    • Bank service charges decreased $1.9 million.
    • Net security gains decreased $2.7 million.
    • Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled $10.0 billion and $5.7 billion, respectively, at March 31, 2015, compared to $10.8 billion and $5.6 billion, respectively, at December 31, 2014.
  • Non-interest expense totaled $217.6 million in 1Q15 compared to $207.7 million in 4Q14.
    • Operating non-interest expense was $211.6 million in 1Q15 compared to $207.1 million in 4Q14.
    • Compensation and benefits increased $6.6 million, primarily reflecting seasonally-higher payroll and benefit-related costs in 1Q15.
    • Occupancy and equipment expense increased $2.4 million and professional and outside services expense increased $1.1 million.
    • The efficiency ratio in 1Q15 increased to 61.9% from 61.3% in 4Q14.
    • Non-operating expenses totaled $6.0 million in 1Q15 compared to $0.6 million in 4Q14.
  • The effective income tax rate was 34.0% for 1Q15 and 33.9% for the full-year of 2014.


Commercial Banking

  • Commercial loans increased $238 million, or 5% annualized, from December 31, 2014.
  • Average commercial loans totaled $19.3 billion in 1Q15, an increase of $235 million, or 5% annualized, from 4Q14.
  • The ratio of originated non-performing commercial loans to originated commercial loans was 0.64% at March 31, 2015 compared to 0.76% at December 31, 2014.
    • Non-performing commercial assets, excluding acquired non-performing loans, totaled $135.4 million at March 31, 2015 compared to $154.9 million at December 31, 2014.
  • Net loan charge-offs totaled $6.0 million, or 0.12% annualized, of average commercial loans in 1Q15, compared to $6.5 million, or 0.14% annualized, in 4Q14.
  • For the originated commercial portfolio, the allowance for loan losses as a percentage of loans was 0.91% at both March 31, 2015 and December 31, 2014.
  • The commercial originated allowance for loan losses represented 143% of originated non-performing commercial loans at March 31, 2015 compared to 120% at December 31, 2014.
  • Commercial deposits totaled $7.8 billion at March 31, 2015 compared to $7.2 billion at December 31, 2014.


Retail Banking

  • Residential mortgage loans increased $119 million, or 10% annualized, from December 31, 2014.
    • Average residential mortgage loans totaled $5.0 billion in 1Q15, an increase of $132 million, or 11% annualized, from 4Q14.
    • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.78% at March 31, 2015 compared to 0.80% at December 31, 2014.
    • Net loan charge-offs totaled $0.4 million, or 0.03% annualized, of average residential mortgage loans in 1Q15, compared to $0.2 million, or 0.02% annualized, in 4Q14.
  • Home equity loans decreased $14 million, or 3% annualized, from December 31, 2014.
    • Average home equity loans totaled $2.1 billion in 1Q15, an increase of $4 million, or 1% annualized, from 4Q14.
    • The ratio of originated non-performing home equity loans to originated home equity loans was 0.93% at March 31, 2015 compared to 0.85% at December 31, 2014.
    • Net loan charge-offs totaled $0.5 million, or 0.10% annualized, of average home equity loans in 1Q15, compared to $1.3 million, or 0.24% annualized, in 4Q14.
  • Retail deposits (excluding brokered deposits) totaled $16.7 billion at March 31, 2015 compared to $16.3 billion at December 31, 2014.