October 15, 2015

PEOPLE'S UNITED FINANCIAL REPORTS THIRD QUARTER NET INCOME AND OPERATING EARNINGS OF $0.23 PER SHARE

Click here for to see third quarter Financial Schedule

BRIDGEPORT, CT – People's United Financial, Inc. (NASDAQ: PBCT) today reported net income of $68.4 million, or $0.23 per share, for the third quarter of 2015, compared to $61.6 million, or $0.21 per share, for the third quarter of 2014, and $61.7 million, or $0.20 per share, for the second quarter of 2015.

Operating earnings were also $68.4 million, or $0.23 per share, for the third quarter of 2015, compared to $63.0 million, or $0.21 per share, for the third quarter of 2014, and $63.7 million, or $0.21 per share, for the second quarter of 2015.

The Company's Board of Directors declared a $0.1675 per share quarterly dividend, payable November 15, 2015 to shareholders of record on November 1, 2015.  Based on the closing stock price on October 14, 2015, the dividend yield on People's United Financial common stock is 4.4 percent.

“Our unwavering commitment to further improve profitability is evident in the results this quarter,” commented Jack Barnes, President and Chief Executive Officer. “Operating earnings of $68.4 million, a nine percent increase from a year ago, were driven by both higher net interest income and fee revenues. The continued successful execution of our business strategies is demonstrated by yet another quarter of loan portfolio growth, sustained excellent asset quality and further progress gathering commercial deposits.”

Barnes concluded, “We remain committed to investing strategically and building the business for the long-term. As such, we are pleased to announce today the acquisition of Kesten-Brown, a Bridgeport, CT based insurance brokerage firm focused on commercial lines and employee benefits. This acquisition will bolster our insurance business and further diversify revenues through additional non-interest income.”

“As we continually strive to further improve the franchise’s operating leverage, we are pleased to report a three percent increase in revenues from the prior year quarter,” stated David Rosato, Senior Executive Vice President and Chief Financial Officer. “Higher net interest income primarily reflected ongoing loan growth, while non-interest income benefited from solid fee income growth in our commercial business. While operating expenses were modestly higher than recent quarters, we are confident our proactive approach to expense management will continue to control costs.”

Rosato concluded, “We remain comfortable with our capital structure and balance sheet strength. Capital ratios continue to be strong, especially given the Company’s diversified business mix and history of exceptional credit risk management. Net charge-offs as a percentage of average loans were once again at a very low level as a result of our conservative and well-defined underwriting philosophy that has served us so well for many years.”

At September 30, 2015, People's United Financial’s common equity tier 1 capital and total risk-based capital ratios were 9.9 percent and 11.8 percent, respectively, and the tangible equity ratio stood at 7.5 percent.  For People's United Bank N.A., common equity tier 1 capital and total risk-based capital ratios were 10.4 percent and 12.8 percent, respectively, at September 30, 2015.

Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.06 percent in the third quarter of 2015, a slight increase from 0.05 percent in the second quarter of 2015, but an improvement from 0.13 percent in the third quarter of 2014.  For the originated loan portfolio,  non-performing loans equaled 0.68 percent of loans at September 30, 2015, compared to 0.71 percent at June 30, 2015 and 0.79 percent at September 30, 2014.

Operating return on average assets of 0.73 percent for the third quarter of 2015 improved from 0.70 percent in the second quarter of 2015, but declined slightly from 0.74 percent in the third quarter of 2014.  Operating return on average tangible stockholders' equity of 10.5 percent in the third quarter of 2015 improved from 9.8 percent in the second quarter of 2015 and 9.9 percent in the third quarter of 2014.

People's United Financial, a diversified financial services company with over $37 billion in assets, provides commercial and retail banking, as well as wealth management services through a network of approximately 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 $15.1 billion at September 30, 2015 compared to $15.7 billion at June 30, 2015.

3Q 2015 Financial Highlights

Summary

  • Net income totaled $68.4 million, or $0.23 per share.
    • Operating earnings totaled $68.4 million, or $0.23 per share.
  • Net interest income totaled $234.8 million in 3Q15 compared to $230.4 million in 2Q15.
    • Interest income on acquired loans decreased $1.0 million to $13.3 million.
  • Net interest margin decreased one basis point from 2Q15 to 2.87% reflecting:
    • One additional calendar day in 3Q15 (increase of two basis points).
    • New loan volume at rates lower than the existing portfolio (decrease of two basis points).
    • Increase in average deposit balances (decrease of one basis point).
  • Provision for loan losses totaled $6.2 million.
    • Net loan charge-offs totaled $4.1 million, of which $2.0 million related to loans with previously-established specific reserves.
    • Net loan charge-off ratio of 0.06% in 3Q15.
    • Reflects a $5.0 million increase in the originated allowance for loan losses due to loan growth and a $0.9 million allowance reversal related to acquired loans.
  • Non-interest income was $87.1 million in 3Q15 compared to $83.0 million in 2Q15.
    • Insurance revenue increased $2.6 million.
    • Customer interest rate swap income increased $1.2 million.
    • Bank service charges increased $1.0 million.
    • Commercial banking lending fees increased $0.7 million.
    • Net gains on sales of residential mortgage loans decreased $0.5 million.
    • Investment management fees decreased $0.5 million.
    • Assets under administration and those under full discretionary management, neither of which are reported as assets of People's United Financial, totaled $9.7 billion and $5.4 billion, respectively, at September 30, 2015, compared to $10.1 billion and $5.6 billion, respectively, at June 30, 2015.
  • Non-interest expense totaled $214.2 million in 3Q15 compared to $211.8 million in 2Q15.
    • Operating non-interest expense was $214.1 million in 3Q15 compared to $208.8 million in 2Q15.
    • Compensation and benefits increased $4.1 million, primarily reflecting the impact of one additional work day and higher health care-related costs in 3Q15.
    • Professional and outside services expense decreased $0.3 million.
    • The efficiency ratio was 61.7% in 3Q15 compared to 61.6% in 2Q15 (see page 16).
    • Non-operating expenses totaled $0.1 million in 3Q15 compared to $3.0 million in 2Q15.
  • The effective income tax rate was 32.6% for 3Q15 and 33.5% for the first nine months of 2015, compared to 33.9% for the full-year of 2014.

Commercial Banking

  • Commercial loans decreased $83 million from June 30, 2015.
    • Excluding the mortgage warehouse portfolio, commercial loans increased $230 million, or 5% annualized, in 3Q15.
  • Average commercial loans totaled $20.0 billion in 3Q15, an increase of $220 million,
    or 4% annualized, from 2Q15.
  • The ratio of originated non-performing commercial loans to originated commercial loans was 0.64% at September 30, 2015 compared to 0.65% at June 30, 2015.
    • Non-performing commercial assets, excluding acquired non-performing loans, totaled
      $139.6 million at September 30, 2015 compared to $143.3 million at June 30, 2015.
  • Net loan charge-offs totaled $2.9 million, or 0.06% annualized, of average commercial loans in 3Q15, compared to $1.5 million, or 0.03% annualized, in 2Q15.
  • For the originated commercial portfolio, the allowance for loan losses as a percentage of loans was 0.91% at September 30, 2015 compared to 0.90% at June 30, 2015.
  • The commercial originated allowance for loan losses represented 143% of originated
    non-performing commercial loans at September 30, 2015 compared to 139% at June 30, 2015.
  • Commercial deposits totaled $9.0 billion at September 30, 2015 compared to $8.2 billion at
    June 30, 2015.

Retail Banking

  • Residential mortgage loans increased $190 million, or 15% annualized, from June 30, 2015.
    • Average residential mortgage loans totaled $5.3 billion in 3Q15, an increase of $156 million, or 12% annualized, from 2Q15.
    • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.74% at September 30, 2015 compared to 0.82% at June 30, 2015.
    • Net loan charge-offs totaled $0.4 million, or 0.03% annualized, of average residential mortgage loans in 3Q15, compared to $0.5 million, or 0.05% annualized, in 2Q15.
  • Home equity loans increased $4 million, or 1% annualized, from June 30, 2015.
    • Average home equity loans totaled $2.1 billion in 3Q15, unchanged from 2Q15.
    • The ratio of originated non-performing home equity loans to originated home equity loans was 1.00% at September 30, 2015 compared to 1.02% at June 30, 2015.
    • Net loan charge-offs totaled $0.6 million, or 0.11% annualized, of average home equity loans in 3Q15, compared to $1.1 million, or 0.20% annualized, in 2Q15.
  • Retail deposits (excluding brokered deposits) totaled $16.6 billion at September 30, 2015 compared to $16.7 billion at June 30, 2015.

Conference Call
On October 15, 2015, 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) 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; and (9) 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.

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Access Information About People's United Financial at www.peoples.com.

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