October 20, 2016

People's United Financial Reports Third Quarter Net Income of $73.7 Million, or $0.24 Per Share 

Click here to see the third quarter Financial Schedule

BRIDGEPORT, CT – People's United Financial, Inc. (NASDAQ: PBCT) today reported net income of $73.7 million, or $0.24 per share, for the third quarter of 2016, compared to $68.4 million, or $0.23 per share, for the third quarter of 2015, and $68.5 million, or $0.23 per share, for the second quarter of 2016. Included in this quarter's results were merger-related expenses of $3.1 million ($2.1 million after-tax), or $0.01 per share.

The Company's Board of Directors declared a $0.17 per share quarterly dividend, payable November 15, 2016 to shareholders of record on November 1, 2016.  Based on the closing stock price on October 19, 2016, the dividend yield on People's United Financial common stock is 4.3 percent.

"The Company's performance continues to reflect business momentum generated through our consistent, solution-oriented approach to banking," commented Jack Barnes, President and Chief Executive Officer. "We have always partnered with clients to deliver thoughtful, straightforward solutions that address their financial needs. This ongoing commitment continues to differentiate People's United throughout our attractive footprint, enabling us to deepen existing relationships and develop new ones. As a result, we have grown the loan portfolio for 24 consecutive quarters, while maintaining exceptional asset quality, and over the same period nearly doubled our deposit base and increased wealth management assets under discretionary management by approximately 40 percent."

Barnes concluded, "The closing and integration processes of the Suffolk Bancorp and Gerstein Fisher transactions are progressing very well. We have very experienced teams executing on our time-tested acquisition approach. We expect to close Gerstein Fisher in early November and continue to move toward closing Suffolk, pending regulatory approvals. As a result of the integration activities over the past few months, we have come away even more excited about the expected benefits of each of these transactions, particularly the talent that will be joining us. We look forward to building upon their successes to further grow and strengthen People's United in the New York metro area."

"We are pleased with our financial results this quarter, which reflect further improvements in profitability and continued growth in earning assets," stated David Rosato, Senior Executive Vice President and Chief Financial Officer. "Record quarterly net income of $73.7 million increased eight percent from the prior year quarter and generated a return on average tangible equity of 10.7 percent. The efficiency ratio of 59.9 percent improved 180 basis points from a year ago due to solid growth in both net interest income and fee revenues as well as ongoing proactive expense management. The net interest margin for the quarter was 2.80 percent, an increase of one basis point on a linked-quarter basis."

Rosato concluded, "The loan portfolio continued to benefit from our diversified business mix. Third quarter annualized loan growth was five percent, with particularly strong results in residential mortgage as well as commercial and industrial lending. Our conservative approach to underwriting remains evident as net charge-offs as a percentage of average loans were only four basis points in the quarter, the lowest level in over nine years. Deposits grew nine percent on an annualized basis during the quarter primarily due to higher non-interest-bearing and municipal balances, while the overall cost of deposits declined one basis point. Furthermore, our balance sheet remains asset sensitive, which will position us well in a rising interest rate environment."

At September 30, 2016, People's United Financial's common equity tier 1 capital and total risk-based capital ratios were 9.7 percent and 11.5 percent, respectively, and the tangible equity ratio stood at 7.2 percent.  For People's United Bank, N.A., common equity tier 1 capital and total risk-based capital ratios were 10.8 percent and 12.8 percent, respectively, at September 30, 2016.

Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.04 percent in the third quarter of 2016, a decrease from 0.07 percent in the second quarter of 2016 and 0.06 percent in the third quarter of 2015.  For the originated loan portfolio, non-performing loans equaled 0.54 percent of loans at September 30, 2016, a decrease from 0.56 percent at June 30, 2016 and 0.68 percent at September 30, 2015.

Return on average assets of 0.73 percent for the third quarter of 2016 increased from 0.70 percent in the second quarter of 2016 and was consistent with the third quarter of 2015.  Return on average tangible stockholders' equity of 10.7 percent in the third quarter of 2016 increased from 10.1 percent in the second quarter of 2016 and 10.5 percent in the third quarter of 2015.

People's United Financial, Inc., a diversified financial services company with $41 billion in total 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.

3Q 2016 Financial Highlights

Summary

  • Net income totaled $73.7 million, or $0.24 per share.
    • Operating earnings totaled $75.8 million, or $0.25 per share (see page 16 of the Financial Schedule).
  • Net interest income totaled $245.3 million in 3Q16 compared to $240.0 million in 2Q16.
  • Net interest margin increased one basis point from 2Q16 to 2.80% reflecting:
    • One additional calendar day in 3Q16 (increase of two basis points).
    • Improved loan yields and mix (increase of two basis points).
    • Lower yield on the securities portfolio (decrease of two basis points).
    • Increase in average borrowing balances and rate (decrease of one basis point).
  • Provision for loan losses totaled $8.4 million.
    • Net loan charge-offs totaled $2.5 million, of which $0.8 million related to loans with previously-established specific reserves.
    • Net loan charge-off ratio of 0.04% in 3Q16.
    • Reflects a $6.7 million increase in the originated allowance for loan losses.
  • Non-interest income was $90.8 million in 3Q16 compared to $85.4 million in 2Q16.
    • Insurance revenue increased $2.8 million, reflecting the benefit from recent acquisitions as well as the seasonal nature of insurance renewals.
    • Net gains on sales of residential mortgages increased $1.0 million.
    • Bank service charges increased $0.6 million.
    • Investment management fees increased $0.2 million.
    • Commercial banking lending fees decreased $2.1 million.
    • At September 30, 2016, assets under administration, which are not reported as assets of People's United Financial, totaled $18.2 billion, of which $5.7 billion are under discretionary management, compared to $16.5 billion and $5.6 billion, respectively, at June 30, 2016.
  • Non-interest expense totaled $221.4 million in 3Q16 compared to $212.9 million in 2Q16.
    • Operating non-interest expense totaled $218.3 million in 3Q16 (see page 16 of the Financial Schedule).
    • Compensation and benefits expense increased $4.7 million, primarily reflecting the impact of one additional work day and higher benefit-related costs in 3Q16.
    • Regulatory assessments expense increased $0.7 million.
    • Professional and outside services expense, excluding $3.1 million of merger-related expenses, decreased $1.8 million.
    • The efficiency ratio was 59.9% in 3Q16 compared to 60.4% in 2Q16 (see page 16 of the Financial Schedule).
  • The effective income tax rate was 30.6% for 3Q16 and 32.4% for the first nine months of 2016, compared to 33.4% for the full-year of 2015.

Commercial Banking

  • Commercial loans totaled $21.2 billion at September 30, 2016, an increase of $107 million, or 2% annualized, from June 30, 2016.
    • The mortgage warehouse portfolio increased $10 million from June 30, 2016.
  • Average commercial loans totaled $21.0 billion in 3Q16, an increase of $310 million, or 6% annualized, from 2Q16.
    • The average mortgage warehouse portfolio increased $117 million in 3Q16.
  • Commercial deposits totaled $10.3 billion at September 30, 2016 compared to $9.5 billion at June 30, 2016.
  • The ratio of originated non-performing commercial loans to originated commercial loans was 0.53% at both September 30, 2016 and June 30, 2016.
  • Non-performing commercial assets, excluding acquired non-performing loans, totaled $127.4 million at September 30, 2016 compared to $125.0 million at June 30, 2016.
  • For the originated commercial portfolio, the allowance for loan losses as a percentage of loans was 0.94% at September 30, 2016 compared to 0.92% at June 30, 2016.
  • The commercial originated allowance for loan losses represented 178% of originated non-performing commercial loans at September 30, 2016 compared to 172% at June 30, 2016.

Retail Banking

  • Residential mortgage loans increased $239 million, or 17% annualized, from June 30, 2016.
    • Average residential mortgage loans totaled $5.9 billion in 3Q16, an increase of $255 million, or 18% annualized, from 2Q16.
  • Home equity loans decreased $16 million from June 30, 2016.
    • Average home equity loans totaled $2.1 billion in 3Q16, a decrease of $18 million from 2Q16.
  • Retail deposits (excluding brokered deposits) totaled $16.8 billion at September 30, 2016 compared to $16.9 billion at June 30, 2016.
  • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.48% at September 30, 2016 compared to 0.53% at June 30, 2016.
  • The ratio of originated non-performing home equity loans to originated home equity loans was 0.80% at September 30, 2016 compared to 0.83% at June 30, 2016.

Conference Call On October 20, 2016, 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; (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.

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

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