PEOPLE'S UNITED FINANCIAL, INC. 
By BRIDGEPORT, Conn., Jan. 19, 2012 /PRNewswire/ -- People's United Financial, Inc. (NASDAQ: PBCT) today announced net income of $43.0 million, or $0.12 per share, for the fourth quarter of 2011, compared to $32.0 million, or $0.09 per share, for the fourth quarter of 2010, and $52.9 million, or $0.15 per share, for the third quarter of 2011. Operating earnings were $58.7 million, or $0.17 per share, for the fourth quarter of 2011, compared to $36.7 million, or $0.10 per share, for the fourth quarter of 2010 and $67.3 million, or $0.19 per share, for this year's third quarter. Included in the quarterly results are merger-related expenses and one-time charges (after-tax) totaling $15.7 million in the fourth quarter of 2011, $4.7 million in the fourth quarter of 2010 and $14.4 million in the third quarter of 2011.
For the year ended December 31, 2011, net income totaled $198.8 million, or $0.57 per share, compared to $85.7 million, or $0.24 per share, for 2010. Operating earnings were $237.1 million, or $0.68 per share, for 2011, compared to $125.4 million, or $0.35 per share, for 2010. Included in both the 2011 and 2010 results are $38.3 million and $39.7 million (after-tax), respectively, of merger-related expenses, core system conversion costs and one-time charges.
The Board of Directors of People's United Financial declared a $0.1575 per share quarterly dividend, payable February 15, 2012 to shareholders of record on February 1, 2012. Based on the closing stock price on January 18, 2012, the dividend yield on People's United Financial common stock is 4.2 percent.
"Our performance throughout 2011 reflects the significant progress we have made in carrying out our two primary objectives - optimizing existing businesses and efficiently deploying capital," stated Jack Barnes, President and Chief Executive Officer. "Our focus on organic loan and deposit growth throughout the franchise, including new market opportunities within the Boston and New York City MSAs, has resulted in improved operating leverage, which is evident in our 2011 financial results."
Barnes added, "Integration of acquisitions has become a core competency for this organization. We have now integrated five acquisitions since early 2010 and exceeded our estimated cost benefits announced at the time of each transaction. Our momentum is based on a 170-year track record with continued outstanding customer service throughout the financial crisis. Offering the full breadth of products and services that our customers need, providing relationship-based solutions, and effectively cross-selling our products across all lines of business are key contributors to our continued growth and strong operating performance."
Barnes concluded, "We remain focused on delivering shareholder value by leveraging opportunities within our existing markets. Further, we have demonstrated our ability to prudently and effectively deploy capital through organic loan and deposit growth, adherence to a strong dividend policy, share repurchases and a thoughtful acquisition strategy."
"On an operating basis, earnings were $59 million, or 17 cents per share, this quarter," said Kirk W. Walters, Senior Executive Vice President and Chief Financial Officer. "The Company's performance this quarter reflects an improvement in net interest income, higher provision expense, an expected decline in fee income, and tighter expense control."
Walters continued, "The net interest margin increased 29 basis points in the fourth quarter of 2011 compared to last year's fourth quarter and 5 basis points compared to the third quarter of 2011. The operating net interest margin was 4.07 percent in the fourth quarter of 2011 compared to 4.11 percent in the third quarter. Included in this quarter's net interest margin is $5 million of cost recovery income from the acquired loan portfolio, which added nine basis points to the margin. As expected, non-interest income declined $13 million from the prior quarter, which was driven by a decrease in bank service charges of approximately $5 million due to changes brought about by the Dodd-Frank Act and lower net security gains of $8.6 million. The decrease in the level of operating non-interest expense this quarter reflects the continued benefit from cost-savings initiatives announced earlier in 2011."
Walters concluded, "While the overall level of non-performing loans is reflective of a period of prolonged economic weakness, we are pleased with the credit trends noted over the past few quarters. In fact, throughout 2011, our net loan charge-off ratio represented less than one-third that of our peers', which is a reflection of the Company's historically strong underwriting standards, the strength of the footprint in which we operate and the resilience of our customers who have successfully managed through the economic crisis."
At December 31, 2011, People's United Financial's tier 1 common and total risk-based capital ratios were 14.3 percent and 16.2 percent, respectively, and the tangible equity ratio stood at 12.0 percent. People's United Bank's tier 1 and total risk-based capital ratios were 13.1 percent and 14.0 percent, respectively, at December 31, 2011.
Operating return on average assets was 0.86 percent for the fourth quarter of 2011, compared to 0.98 percent for the third quarter of 2011 and 0.64 percent for the fourth quarter of 2010. Operating return on average tangible stockholders' equity was 7.4 percent for the fourth quarter of 2011, compared to 8.0 percent for the third quarter of 2011 and 4.2 percent for the fourth quarter of 2010.
Loans acquired in connection with acquisitions have been recorded at fair value based on an initial estimate of expected cash flows, including a reduction for estimated credit losses, and without carryover of the respective portfolio's historical allowance for loan losses. A decrease in expected cash flows in subsequent periods may indicate that a loan is impaired, which would require the establishment of an allowance for loan losses. As such, selected asset quality metrics have been highlighted to distinguish between the 'originated' portfolio and the 'acquired' portfolio.
At December 31, 2011, the allowance for loan losses for originated loans as a percentage of originated loans, which represents all loans other than those acquired, was 1.04 percent and as a percentage of originated non-performing loans was 60 percent, compared to 1.09 percent and 69 percent, respectively, at September 30, 2011. For the originated commercial banking portfolio, the allowance for loan losses ratio was 1.39 percent at December 31, 2011 and represented 77 percent of non-performing commercial banking loans at that date.
For the originated loan portfolio, non-performing loans equaled 1.75 percent of originated loans at December 31, 2011, compared to 1.60 percent at September 30, 2011 and 1.70 percent at December 31, 2010. Non-performing assets (excluding acquired non-performing loans) equaled 2.00 percent of originated loans, REO and repossessed assets at December 31, 2011 compared to 1.88 percent at September 30, 2011 and 2.09 percent at December 31, 2010.
Non-performing loans in the acquired portfolio, which represent the contractual balances of loans acquired that meet our definition of non-performing but for which the risk of loss has already been considered by virtue of our estimate of acquisition-date fair value and/or the existence of an FDIC loss-share agreement, totaled $249.0 million at December 31, 2011 compared to $241.6 million at September 30, 2011 and $359.8 million at December 31, 2010.
Fourth quarter net loan charge-offs totaled $14.8 million compared to $13.4 million in the third quarter of 2011. Net loan charge-offs as a percent of average loans on an annualized basis were 0.29 percent in the fourth quarter of 2011 compared to 0.27 percent in this year's third quarter. The provision for loan losses in the fourth quarter of 2011 reflects a $7.4 million increase in the allowance for loan losses on originated loans related to the growth in the commercial and residential mortgage loan portfolios and a $7.4 million increase due to impairment on acquired loans, partially offset by charge-offs of $8.9 million against previously established specific reserves.
People's United Financial, a diversified financial services company with $28 billion in assets, provides commercial and retail banking, as well as wealth management services through a network of 372 branches in Connecticut, Massachusetts, Vermont, New York, New Hampshire and Maine. Through its subsidiaries, People's United Financial provides equipment financing, brokerage and insurance services.
Conference Call
On January 19, 2012, 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.
4Q 2011 Financial Highlights
Summary
-- Net income was $43.0 million, or $0.12 per share.
-- Operating earnings were $58.7 million, or $0.17 per share.
-- Net interest income totaled $242.1 million.
-- Net interest margin increased 5 basis points from 3Q11 to 4.16%.
-- Cost recovery income on acquired loans, representing cash receipts in
excess of carrying amount, totaled $5 million in 4Q11 and contributed 9
basis points.
-- The normalized yield on loans in 4Q11, which excludes cost recovery
income, reduced the net interest margin by 10 basis points.
-- Lower funding costs in 4Q11 benefited the net interest margin by 6 basis
points.
-- Provision for loan losses totaled $20.7 million.
-- Net loan charge-offs totaled $14.8 million, of which $8.9 million
related to loans with specific reserves established in prior periods.
-- Allowance for loan losses on originated loans in 4Q11 reflects a $7.4
million increase in response to loan growth.
-- Includes a provision for loan losses on acquired loans of $7.4 million.
-- Non-interest income was $71.7 million in 4Q11 compared to $84.7 million
in 3Q11.
-- Bank service charges decreased $4.2 million in 4Q11 to $31.6 million,
primarily as a result of certain provisions of the Dodd-Frank Act, which
became effective in October 2011.
-- Insurance revenue decreased $1.8 million from 3Q11, primarily reflecting
the seasonal nature of insurance renewals.
-- 4Q11 and 3Q11 include losses of $0.4 million and $4.8 million,
respectively, on sales of acquired loans.
-- Loan prepayment fees declined $2.7 million from 3Q11.
-- 3Q11 includes net security gains of $8.6 million (none in 4Q11).
-- Non-interest expense totaled $230.2 million in 4Q11 compared to $231.9
million in 3Q11.
-- Operating non-interest expense was $207.2 million in 4Q11 compared to
$210.4 million in 3Q11, reflecting declines in compensation and
benefits, occupancy and equipment, and other non-interest expense.
-- 4Q11 and 3Q11 include $23.0 million and $21.5 million, respectively, of
merger-related expenses and one-time charges.
-- 4Q11 includes a $1.4 million charge relating to Visa Inc.'s funding of
its litigation escrow account.
-- Effective income tax rate was 31.6% for 4Q11 and 32.7% for 2011.
Commercial Banking
-- Excluding acquired loans, commercial banking loans increased $470
million, or 17% annualized, from September 30, 2011.
-- Average commercial banking loans totaled $14.4 billion, an increase of
$156 million, or 4% annualized, from 3Q11.
-- Non-performing commercial banking assets, excluding acquired
non-performing loans, totaled $240.8 million at December 31, 2011, up
from $213.1 million at September 30, 2011.
-- The ratio of originated non-performing commercial banking loans to
originated commercial banking loans was 1.81% at December 31, 2011
compared to 1.61% at September 30, 2011.
-- Net loan charge-offs totaled $11.8 million, or 0.33% annualized, of
average commercial banking loans in 4Q11, compared to $9.8 million, or
0.28% annualized, in 3Q11.
-- For the originated commercial banking portfolio, the allowance for loan
losses as a percentage of loans was 1.39% at December 31, 2011 compared
to 1.48% at September 30, 2011.
-- The commercial banking allowance for loan losses represented 77% of
originated non-performing commercial banking loans at December 31, 2011
compared to 92% at September 30, 2011.
-- Commercial deposits totaled $5.2 billion at December 31, 2011 compared
to $5.0 billion at September 30, 2011.
Retail Banking
-- Excluding acquired loans, residential mortgage loans increased $168
million, or 23% annualized, from September 30, 2011.
-- The ratio of originated non-performing residential mortgage loans to
originated residential mortgage loans was 2.19% at December 31,
2011, unchanged from September 30, 2011.
-- Average residential mortgage loans totaled $3.6 billion, an increase of
$215 million, or 26% annualized, from 3Q11.
-- Net loan charge-offs totaled $1.6 million, or 0.18% annualized, of
average residential mortgage loans in 4Q11, compared to $2.1
million, or 0.25% annualized, in 3Q11.
-- Excluding acquired loans, home equity loans remained unchanged from
September 30, 2011.
-- The ratio of originated non-performing home equity loans to
originated home equity loans was 0.82% at December 31, 2011 compared
to 0.74% at September 30, 2011.
-- Average home equity loans totaled $2.1 billion in 4Q11, unchanged from
3Q11.
-- Net loan charge-offs totaled $0.7 million, or 0.15% annualized, of
average home equity loans in 4Q11, compared to $1.1 million, or
0.21% annualized, in 3Q11.
-- Retail deposits totaled $15.6 billion at December 31, 2011 compared to
$15.5 billion at September 30, 2011.
Wealth Management and Insurance
-- Insurance revenue decreased $1.8 million from 3Q11, primarily reflecting
the seasonal nature of insurance renewals, and increased $0.3 million
from 4Q10.
-- Brokerage commissions declined $0.2 million from 3Q11 and $0.3 million
from 4Q10, primarily reflecting lower commissions on mutual funds and
fixed income products due to the uncertainty in the equity markets and
the low interest rate environment.
-- Investment management fees decreased $0.1 million from 3Q11 and
increased $0.4 million from 4Q10.
-- Assets under administration and those under full discretionary
management, neither of which are reported as assets of People's United
Financial, totaled $12.5 billion and $4.3 billion, respectively, at
December 31, 2011.
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" 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) residential mortgage and secondary market activity; (7) changes in accounting and regulatory guidance applicable to banks; (8) price levels and conditions in the public securities markets generally; (9) competition and its effect on pricing, spending, third-party relationships and revenues; (10) the successful integration of acquired companies; and (11) 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
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(dollars
in
millions,
except
per
share
data) 2011 2011 2011 2011 2010
Earnings Data:
Net
interest
income $242.1 $240.0 $221.2 $220.3 $189.8
Provision
for
loan
losses 20.7 14.4 14.0 14.6 10.9
Non-
interest
income
(1) 71.7 84.7 76.6 74.6 68.1
Non-
interest
expense
(2) 230.2 231.9 207.0 202.8 199.1
Income
before
income
tax
expense 62.9 78.4 76.8 77.5 47.9
Net
income 43.0 52.9 51.2 51.7 32.0
Operating
earnings
(3) 58.7 67.3 57.3 53.8 36.7
Selected
Statistical
Data:
Net
interest
margin
(4) 4.16% 4.11% 4.13% 4.16% 3.87%
Operating
net
interest
margin
(3),
(4) 4.07 4.11 4.09 4.00 3.87
Return
on
average
assets
(4) 0.63 0.77 0.82 0.84 0.56
Operating
return
on
average
assets
(3),
(4) 0.86 0.98 0.92 0.87 0.64
Return
on
average
tangible
assets
(4) 0.68 0.84 0.89 0.91 0.61
Return
on
average
stockholders'
equity
(4) 3.2 3.8 4.0 4.0 2.4
Return
on
average
tangible
stockholders'
equity
(4) 5.4 6.3 6.3 6.4 3.7
Operating
return on
average
tangible
stockholders'
equity
(3),
(4) 7.4 8.0 7.1 6.7 4.2
Efficiency
ratio
(3) 62.7 63.1 65.7 66.2 71.1
Common Share
Data:
Basic
and
diluted
earnings
per
share $0.12 $0.15 $0.15 $0.15 $0.09
Operating
earnings
per
share
(3) 0.17 0.19 0.17 0.15 0.10
Dividends
paid
per
share 0.1575 0.1575 0.1575 0.1550 0.1550
Dividend
payout
ratio 127.7% 108.4% 106.4% 104.9% 172.5%
Operating
dividend
payout
ratio
(3) 93.4 85.3 95.1 100.7 150.4
Book
value
per
share
(end
of
period) $14.99 $15.18 $15.01 $14.92 $14.91
Tangible
book
value
per
share
(end
of
period)
(3) 8.75 9.01 9.38 9.27 9.30
Stock price:
High 13.07 13.96 13.81 14.49 14.17
Low 10.91 10.50 12.55 12.17 12.20
Close
(end
of
period) 12.85 11.40 13.44 12.58 14.01
Common
shares
(end
of
period)
(in
millions) 348.68 348.59 346.12 345.97 350.07
Weighted
average
diluted
common
shares
(in
millions) 346.68 358.28 343.88 346.01 352.53
(1) Includes net security gains (losses) of $8.6 million
and $(1.0) million for the three months ended Sept. 30,
2011 and Dec. 31, 2010, respectively.
(2) Includes a total of $23.0 million, $21.5 million, $9.2
million, $3.1 million and $7.0 million of merger-related
expenses,
core system conversion costs and one-time charges for the
three months ended Dec. 31, 2011, Sept. 30, 2011,
June 30, 2011, March 31, 2011 and Dec. 31, 2010,
respectively.
(3) See non-GAAP financial measures and reconciliation to
GAAP.
(4) Annualized.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
Twelve Months Ended
December 31,
(dollars in millions, except per share
data) 2011 2010
Earnings Data:
Net interest income $923.6 $699.0
Provision for loan losses 63.7 60.0
Non-interest income 307.6 270.0
Non-interest expense (1) 871.9 782.0
Income before income tax expense 295.6 127.0
Net income 198.8 85.7
Operating earnings (2) 237.1 125.4
Selected Statistical Data:
Net interest margin 4.14% 3.70%
Operating net interest margin (2) 4.07 3.70
Return on average assets 0.76 0.39
Operating return on average assets (2) 0.91 0.57
Return on average tangible assets 0.83 0.42
Return on average stockholders' equity 3.8 1.6
Return on average tangible stockholders'
equity 6.2 2.4
Operating return on average tangible
stockholders' equity (2) 7.4 3.5
Efficiency ratio (2) 64.4 72.4
Common Share Data:
Basic and diluted earnings per share $0.57 $0.24
Operating earnings per share (2) 0.68 0.35
Dividends paid per share 0.6275 0.6175
Dividend payout ratio 111.1% 254.5%
Operating dividend payout ratio (2) 93.2 173.9
Book value per share (end of period) $14.99 $14.91
Tangible book value per share (end of
period) (2) 8.75 9.30
Stock price:
High 14.49 17.08
Low 10.50 12.20
Close (end of period) 12.85 14.01
Common shares (end of period) (in
millions) 348.68 350.07
Weighted average diluted common shares
(in millions) 348.74 352.67
(1) Includes a total of $56.8 million and $58.9 million of
merger-related expenses, core system
conversion costs and one-time charges for the twelve months
ended December 31, 2011
and 2010, respectively.
(2) See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
FINANCIAL HIGHLIGHTS - Continued
As of and for the Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(dollars in
millions) 2011 2011 2011 2011 2010
Financial Condition Data:
General:
Total assets $27,568 $27,213 $25,323 $24,962 $25,037
Loans 20,400 20,148 17,687 17,523 17,328
Securities 2,931 2,540 3,226 3,203 3,033
Short-term
investments (1) 411 779 822 926 1,120
Allowance for loan
losses 183 177 176 178 173
Goodwill and other
acquisition-
related
intangibles 2,174 2,151 1,947 1,953 1,962
Deposits 20,816 20,487 18,278 18,110 17,933
Borrowings 857 881 1,331 1,158 1,011
Subordinated notes
and debentures 160 159 159 176 182
Stockholders'
equity 5,225 5,291 5,194 5,160 5,219
Non-performing
assets (2) 337 305 315 292 303
Net loan charge-
offs 14.8 13.4 15.5 9.6 10.9
Average Balances:
Loans $20,217 $19,856 $17,654 $17,290 $15,770
Securities 2,411 2,976 3,264 3,089 2,457
Short-term
investments (1) 854 756 629 843 1,418
Residential
mortgage loans
held for sale 60 26 17 52 52
Total earning
assets 23,542 23,614 21,564 21,274 19,697
Total assets 27,285 27,355 24,853 24,623 22,961
Deposits 20,597 20,259 18,225 17,944 16,531
Total funding
liabilities 21,653 21,499 19,353 19,121 17,236
Stockholders'
equity 5,302 5,515 5,177 5,185 5,335
Ratios:
Net loan charge-offs to
average loans
(annualized) 0.29% 0.27% 0.35% 0.22% 0.28%
Non-performing assets to
originated loans,
real estate owned
and repossessed
assets (2) 2.00 1.88 2.05 1.96 2.09
Allowance for loan losses to:
Originated loans
(2) 1.04 1.09 1.15 1.19 1.19
Originated non-
performing loans
(2) 59.7 68.5 68.0 73.8 70.3
Average
stockholders'
equity to average
total assets 19.4 20.2 20.8 21.1 23.2
Stockholders'
equity to total
assets 19.0 19.4 20.5 20.7 20.8
Tangible
stockholders'
equity to tangible
assets (3) 12.0 12.5 13.9 13.9 14.1
Total risk-based
capital (4) 16.2 16.7 19.1 19.4 19.3
(1) Includes securities purchased under agreements to resell.
(2) Excludes acquired loans.
(3) See non-GAAP financial measures and reconciliation to GAAP.
(4) Consolidated.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
Dec. 31, Sept. 30, Dec. 31,
(in millions) 2011 2011 2010
Assets
Cash and due from banks $370.2 $370.9 $354.7
Short-term investments 410.7 779.1 599.8
Total cash and cash
equivalents 780.9 1,150.0 954.5
Securities purchased under
agreements to resell - - 520.0
Securities:
Trading account securities,
at fair value 71.8 69.9 83.5
Securities available for
sale, at fair value 2,725.5 2,336.0 2,831.1
Securities held to maturity,
at amortized cost 56.4 56.4 55.1
Federal Home Loan Bank
stock, at cost 77.7 77.7 63.6
Total securities 2,931.4 2,540.0 3,033.3
Residential mortgage loans
held for sale 101.9 45.4 88.5
Loans:
Commercial (1) 7,382.0 7,262.5 5,196.0
Commercial real estate (1) 7,172.2 7,142.9 7,306.3
Residential mortgage 3,628.4 3,502.0 2,647.5
Consumer 2,217.4 2,240.8 2,177.9
Total loans 20,400.0 20,148.2 17,327.7
Less allowance for loan
losses (182.9) (177.0) (172.5)
Total loans, net 20,217.1 19,971.2 17,155.2
Goodwill and other
acquisition-related
intangibles 2,174.2 2,151.2 1,962.0
Premises and equipment 339.6 363.1 325.1
Bank-owned life insurance 332.7 330.7 291.8
Other assets 690.1 661.4 706.7
Total assets $27,567.9 $27,213.0 $25,037.1
Liabilities
Deposits:
Non-interest-bearing $4,506.2 $4,217.5 $3,872.6
Savings, interest-bearing
checking and money market 10,970.4 10,789.5 8,897.8
Time 5,339.2 5,479.7 5,162.7
Total deposits 20,815.8 20,486.7 17,933.1
Borrowings:
Retail repurchase agreements 497.2 519.8 472.2
Federal Home Loan Bank
advances 332.4 333.4 509.3
Federal funds purchased and
other borrowings 27.1 27.3 29.1
Total borrowings 856.7 880.5 1,010.6
Subordinated notes and
debentures 159.6 159.4 182.2
Other liabilities 510.8 395.9 691.9
Total liabilities 22,342.9 21,922.5 19,817.8
Stockholders' Equity
Common stock 3.9 3.9 3.7
Additional paid-in capital 5,247.0 5,242.5 4,978.8
Retained earnings 744.1 757.7 772.6
Treasury stock, at cost (493.5) (497.3) (248.9)
Accumulated other
comprehensive loss (2) (95.8) (36.8) (99.0)
Unallocated common stock of
Employee Stock Ownership
Plan, at cost (180.7) (179.5) (187.9)
Total stockholders' equity 5,225.0 5,290.5 5,219.3
Total liabilities and
stockholders' equity $27,567.7 $27,213.0 $25,037.1
(1) Approximately $875 million of loans secured, in part, by
owner-occupied commercial properties were reclassified
from commercial real estate loans to commercial loans as of
March 31, 2011.
(2) The change from Sept. 30, 2011 to Dec. 31, 2011 reflects,
in part, the after-tax change in the pension net
actuarial loss.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in
millions,
except
per
share
data) 2011 2011 2011 2011 2010
Interest and
dividend
income:
Commercial
real
estate
(1) $100.3 $98.0 $92.5 $101.6 $85.9
Commercial
(1) 96.9 97.4 85.9 78.6 70.5
Residential
mortgage 35.6 34.5 29.7 29.3 27.1
Consumer 21.2 21.5 20.6 20.9 22.1
Total
interest
on
loans 254.0 251.4 228.7 230.4 205.6
Securities 17.3 21.7 23.4 21.0 13.6
Residential
mortgage
loans
held
for
sale 0.7 0.4 0.3 0.7 0.7
Short-
term
investments 0.5 0.5 0.4 0.6 0.6
Securities
purchased
under
agreements
to
resell - - - 0.1 0.3
Total
interest
and
dividend
income 272.5 274.0 252.8 252.8 220.8
Interest
expense:
Deposits 25.9 28.5 26.4 26.6 26.5
Borrowings 1.7 2.4 2.4 2.5 1.2
Subordinated
notes
and
debentures 2.8 3.1 2.8 3.4 3.3
Total
interest
expense 30.4 34.0 31.6 32.5 31.0
Net
interest
income 242.1 240.0 221.2 220.3 189.8
Provision
for
loan
losses 20.7 14.4 14.0 14.6 10.9
Net
interest
income
after
provision
for
loan
losses 221.4 225.6 207.2 205.7 178.9
Non-
interest
income:
Bank
service
charges 31.6 35.8 32.9 31.0 30.7
Investment
management
fees 8.3 8.4 8.3 8.2 7.9
Insurance
revenue 7.2 9.0 6.6 7.9 6.9
Brokerage
commissions 2.6 2.8 3.3 3.2 2.9
Net
gains
on
sales
of
residential
mortgage
loans 2.1 1.3 1.1 3.1 4.2
Net
(losses)
gains
on
sales
of
acquired
loans (0.4) (4.8) 7.2 5.5 -
Bank-
owned
life
insurance 1.7 2.0 1.4 1.2 1.0
Merchant
services
income,
net 1.1 1.1 1.1 1.0 1.1
Net
security
gains
(losses) - 8.6 0.1 0.1 (1.0)
Other
non-
interest
income 17.5 20.5 14.6 13.4 14.4
Total
non-
interest
income 71.7 84.7 76.6 74.6 68.1
Non-
interest
expense:
Compensation
and
benefits 111.0 110.1 102.5 105.4 98.3
Occupancy
and
equipment 34.4 34.9 30.9 33.1 28.1
Professional
and
outside
service
fees 18.7 18.6 17.4 15.9 19.8
Amortization
of
other
acquisition-
related
intangibles 7.0 7.0 6.0 5.9 6.1
Merger-
related
expenses 13.3 20.1 6.4 3.1 4.8
Other
non-
interest
expense 45.8 41.2 43.8 39.4 42.0
Total
non-
interest
expense
(2) 230.2 231.9 207.0 202.8 199.1
Income
before
income
tax
expense 62.9 78.4 76.8 77.5 47.9
Income
tax
expense 19.9 25.5 25.6 25.8 15.9
Net
income $43.0 $52.9 $51.2 $51.7 $32.0
Basic
and
diluted
earnings
per
common
share $0.12 $0.15 $0.15 $0.15 $0.09
(1) Approximately $875 million of loans secured, in
part, by owner-occupied commercial properties were
reclassified
from commercial real estate loans to commercial loans as
of March 31, 2011.
(2) In addition to merger-related expenses, total non-
interest expense includes $9.7 million, $1.4 million,
$2.8 million
and $2.2 million of non-operating expenses for the
three months ended Dec. 31, 2011, Sept. 30, 2011, June
30, 2011
and Dec. 31, 2010, respectively. See non-GAAP financial
measures and reconciliation to GAAP.
People's United Financial, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Twelve Months Ended
December 31,
(in millions, except per share
data) 2011 2010
Interest and dividend income:
Commercial real estate $392.4 $312.1
Commercial 358.8 266.3
Residential mortgage 129.1 109.4
Consumer 84.2 89.6
Total interest on loans 964.5 777.4
Securities 83.4 43.5
Residential mortgage loans held
for sale 2.1 2.4
Short-term investments 2.0 4.6
Securities purchased under
agreements to resell 0.1 0.9
Total interest and dividend
income 1,052.1 828.8
Interest expense:
Deposits 107.4 112.8
Borrowings 9.0 2.3
Subordinated notes and debentures 12.1 14.7
Total interest expense 128.5 129.8
Net interest income 923.6 699.0
Provision for loan losses 63.7 60.0
Net interest income after
provision for loan losses 859.9 639.0
Non-interest income:
Bank service charges 131.3 126.3
Investment management fees 33.2 32.0
Insurance revenue 30.7 28.8
Brokerage commissions 11.9 11.3
Net gains on sales of residential
mortgage loans 7.6 12.1
Net gains on sales of acquired
loans 7.5 -
Bank-owned life insurance 6.3 6.7
Merchant services income, net 4.3 4.3
Net security gains (losses) 8.8 (1.0)
Other non-interest income 66.0 49.5
Total non-interest income 307.6 270.0
Non-interest expense:
Compensation and benefits 429.0 380.4
Occupancy and equipment 133.3 114.4
Professional and outside service
fees 70.6 72.7
Amortization of other
acquisition-related intangibles 25.9 21.7
Merger-related expenses 42.9 23.3
Other non-interest expense 170.2 169.5
Total non-interest expense (1) 871.9 782.0
Income before income tax expense 295.6 127.0
Income tax expense 96.8 41.3
Net income $198.8 $85.7
Basic and diluted earnings per
common share $0.57 $0.24
(1) In addition to merger-related expenses, total non-interest
expense includes $13.9 million and $35.6 million
of non-operating expenses for the twelve months ended Dec. 31,
2011 and 2010, respectively.
See non-GAAP financial measures and reconciliation to GAAP.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
(1)
December 31, 2011 September 30, 2011
Three
months
ended Average Yield/ Average Yield/
(dollars
in
millions) Balance Interest Rate Balance Interest Rate
Assets:
Short-
term
investments $853.9 $0.5 0.25% $755.9 $0.5 0.29%
Securities
purchased
under
agreements
to
resell - - - - - -
Securities
(2) 2,410.9 17.9 2.97 2,976.3 22.2 2.99
Residential
mortgage
loans
held
for
sale 60.3 0.7 4.61 25.6 0.4 5.80
Loans:
Commercial
real
estate 7,114.9 100.3 5.64 7,157.0 98.0 5.48
Commercial 7,300.8 98.9 5.42 7,102.3 99.6 5.61
Residential
mortgage 3,571.6 35.6 3.99 3,356.4 34.5 4.10
Consumer 2,230.1 21.2 3.80 2,240.7 21.5 3.84
Total
loans 20,217.4 256.0 5.07 19,856.4 253.6 5.11
Total
earning
assets 23,542.5 $275.1 4.68% 23,614.2 $276.7 4.69%
Other
assets 3,742.2 3,740.5
Total
assets $27,284.7 $27,354.7
Liabilities
and
stockholders'
equity:
Deposits:
Non-
interest-
bearing $4,330.6 $- - % $4,094.5 $- - %
Savings,
interest-
bearing
checking
and
money
market 10,841.4 12.4 0.46 10,642.9 14.1 0.53
Time 5,425.2 13.5 1.00 5,522.0 14.4 1.04
Total
deposits 20,597.2 25.9 0.50 20,259.4 28.5 0.56
Borrowings:
Retail
repurchase
agreements 527.4 0.4 0.33 520.6 0.5 0.43
Federal
Home
Loan
Bank
advances 332.9 1.2 1.49 514.6 1.8 1.39
Federal
funds
purchased
and
other
borrowings 36.0 0.1 0.78 27.9 0.1 0.95
Total
borrowings 896.3 1.7 0.78 1,063.1 2.4 0.91
Subordinated
notes
and
debentures 159.5 2.8 7.02 176.0 3.1 6.86
Total
funding
liabilities 21,653.0 $30.4 0.56% 21,498.5 $34.0 0.63%
Other
liabilities 330.2 341.0
Total
liabilities 21,983.2 21,839.5
Stockholders'
equity 5,301.5 5,515.2
Total
liabilities
and
stockholders'
equity $27,284.7 $27,354.7
Net
interest
income/
spread (3) $244.7 4.12% $242.7 4.06%
Net
interest
margin 4.16% 4.11%
(1) Average yields
earned and rates paid
are annualized.
(2) Average balances and yields for securities
available for sale are based on amortized cost.
(3) The fully taxable equivalent ("FTE") adjustment
was $2.6 million, $2.7 million and $0.9 million for
the three months ended December 31, 2011, September
30, 2011 and December 31, 2010, respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS (1)
December 31, 2010
Three months ended Average Yield/
(dollars in millions) Balance Interest Rate
Assets:
Short-term investments $814.7 $0.6 0.29%
Securities purchased under
agreements to resell 603.9 0.3 0.21
Securities (2) 2,456.7 13.6 2.22
Residential mortgage loans
held for sale 51.7 0.7 5.75
Loans:
Commercial real estate 6,054.3 85.9 5.67
Commercial 5,086.5 71.4 5.62
Residential mortgage 2,459.9 27.1 4.41
Consumer 2,169.5 22.1 4.07
Total loans 15,770.2 206.5 5.24
Total earning assets 19,697.2 $221.7 4.50%
Other assets 3,263.3
Total assets $22,960.5
Liabilities and stockholders' equity:
Deposits:
Non-interest-bearing $3,633.5 $- - %
Savings, interest-bearing checking
and money market 8,249.0 11.5 0.56
Time 4,648.4 15.0 1.29
Total deposits 16,530.9 26.5 0.64
Borrowings:
Retail repurchase
agreements 340.2 0.4 0.53
Federal Home Loan Bank
advances 178.2 0.8 1.69
Federal funds purchased and
other borrowings 15.0 - 0.70
Total borrowings 533.4 1.2 0.92
Subordinated notes and
debentures 171.3 3.3 7.75
Total funding liabilities 17,235.6 $31.0 0.72%
Other liabilities 390.0
Total liabilities 17,625.6
Stockholders' equity 5,334.9
Total liabilities and
stockholders' equity $22,960.5
Net interest income/spread (3) $190.7 3.78%
Net interest margin 3.87%
(1) Average yields earned and rates paid are
annualized.
(2) Average balances and yields for securities available for
sale are based on amortized cost.
(3) The FTE adjustment was $2.6 million, $2.7 million and
$0.9 million for the three months ended December 31, 2011,
September 30, 2011 and December 31, 2010,
respectively.
People's United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
December 31, 2011 December 31, 2010
Twelve
months
ended Average Yield/ Average Yield/
(dollars
in
millions) Balance Interest Rate Balance Interest Rate
Assets:
Short-
term
investments $743.1 $2.0 0.28% $1,725.0 $4.6 0.27%
Securities
purchased
under
agreements
to
resell 27.3 0.1 0.17 456.2 0.9 0.20
Securities
(1) 2,933.3 85.1 2.90 1,579.5 43.5 2.76
Residential
mortgage
loans
held
for
sale 38.8 2.1 5.42 43.4 2.4 5.59
Loans:
Commercial
real
estate 6,971.8 392.4 5.63 5,594.8 312.1 5.58
Commercial 6,465.4 364.9 5.64 4,961.9 269.6 5.43
Residential
mortgage 3,126.8 129.1 4.13 2,428.6 109.4 4.51
Consumer 2,190.1 84.2 3.85 2,199.2 89.6 4.07
Total
loans 18,754.1 970.6 5.18 15,184.5 780.7 5.14
Total
earning
assets 22,496.6 $1,059.9 4.71% 18,988.6 $832.1 4.38%
Other
assets 3,531.6 3,027.6
Total
assets $26,028.2 $22,016.2
Liabilities
and
stockholders'
equity:
Deposits:
Non-
interest-
bearing $4,032.8 $- - % $3,426.0 $- - %
Savings,
interest-
bearing
checking
and
money
market 9,970.1 51.0 0.51 7,853.6 47.4 0.60
Time 5,276.6 56.4 1.07 4,533.5 65.4 1.44
Total
deposits 19,279.5 107.4 0.56 15,813.1 112.8 0.71
Borrowings:
Retail
repurchase
agreements 486.6 2.0 0.41 209.2 1.0 0.48
Federal
Home
Loan
Bank
advances 456.1 6.7 1.48 52.3 1.1 2.22
Federal
funds
purchased
and
other
borrowings 36.6 0.3 0.75 9.0 0.2 2.20
Total
borrowings 979.3 9.0 0.92 270.5 2.3 0.88
Subordinated
notes
and
debentures 170.4 12.1 7.08 179.6 14.7 8.17
Total
funding
liabilities 20,429.2 $128.5 0.63% 16,263.2 $129.8 0.80%
Other
liabilities 327.7 384.7
Total
liabilities 20,756.9 16,647.9
Stockholders'
equity 5,271.3 5,368.3
Total
liabilities
and
stockholders'
equity $26,028.2 $22,016.2
Net
interest
income/
spread
(2) $931.4 4.08% $702.3 3.58%
Net
interest
margin 4.14% 3.70%
(1) Average balances and yields for securities
available for sale are based on amortized cost.
(2) The FTE adjustment was $7.8 million and $3.3
million for the twelve months ended December 31,
2011 and 2010,
respectively.
People's United Financial, Inc.
NON-PERFORMING ASSETS
Dec. Sept. June March Dec.
31, 30, 30, 31, 31,
(dollars
in
millions) 2011 2011 2011 2011 2010
Originated non-
performing
loans:
Commercial
Banking:
Commercial
real
estate (1) $106.7 $91.0 $90.2 $71.7 $82.5
Commercial
and
industrial
(1) 59.2 49.2 54.1 48.9 38.2
Equipment
financing 42.9 37.9 36.0 38.6 36.0
Total 208.8 178.1 180.3 159.2 156.7
Retail:
Residential
mortgage 68.9 65.5 65.8 70.4 78.8
Home
equity 15.8 14.2 12.3 10.5 9.1
Other
consumer 0.3 0.5 0.4 0.4 0.6
Total 85.0 80.2 78.5 81.3 88.5
Total
originated
non-
performing
loans (2) 293.8 258.3 258.8 240.5 245.2
REO 26.8 27.7 33.5 38.1 39.8
Repossessed
assets 16.1 19.2 23.1 13.5 18.1
Total non-
performing
assets $336.7 $305.2 $315.4 $292.1 $303.1
Acquired
non-
performing
loans
(contractual
amount)
(3) $249.0 $241.6 $250.4 $324.4 $359.8
Originated non-
performing loans
as a percentage
of
originated
loans 1.75% 1.60% 1.69% 1.62% 1.70%
Non-performing
assets as a
percentage of:
Originated
loans, REO
and
repossessed
assets 2.00 1.88 2.05 1.96 2.09
Tangible
stockholders'
equity
and
allowance
for loan
losses 10.44 9.20 9.21 8.63 8.84
(1) Non-performing commercial and industrial
loans at March 31, 2011 include approximately
$10.7 million of loans
secured, in part, by owner-occupied commercial
properties that were previously classified as
non-performing commercial
real estate loans.
(2) Reported net of government guarantees
totaling $12.1 million at Dec. 31, 2011, $11.3
million at Sept. 30, 2011,
$10.7 million at June 30, 2011, $10.0 million at March 31, 2011 and $9.4 million at Dec. 31, 2010.
(3) Represents acquired loans that meet
People's United Financial's definition of a
non-performing loan but for which the risk
of credit loss has been considered by virtue of
our estimate of acquisition-date fair value
and/or the existence of an FDIC
loss-share agreement. Because acquired loans
are initially recorded at an amount estimated
to be collectible, losses on such
loans, when incurred, are first applied against
the non-accretable difference established in
purchase accounting and
then to any allowance for loan losses
recognized subsequent to acquisition.
People's United Financial, Inc.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Three Months Ended
Dec. Sept. June March Dec.
31, 30, 30, 31, 31,
(dollars in millions) 2011 2011 2011 2011 2010
Allowance for loan losses
on originated loans:
Balance at beginning of
period $177.0 $176.0 $177.5 $172.5 $172.5
Charge-offs (15.7) (14.6) (17.4) (10.4) (12.2)
Recoveries 0.9 1.2 1.9 0.8 1.3
Net loan charge-offs (14.8) (13.4) (15.5) (9.6) (10.9)
Provision for loan losses 13.3 14.4 14.0 14.6 10.9
Balance at end of period 175.5 177.0 176.0 177.5 172.5
Allowance for loan losses
on acquired loans:
Balance at beginning of
period - - - - -
Provision for loan losses 7.4 - - - -
Balance at end of period 7.4 - - - -
Total allowance for loan
losses $182.9 $177.0 $176.0 $177.5 $172.5
Allowance for loan losses
on originated loans as a
percentage of:
Originated loans 1.04% 1.09% 1.15% 1.19% 1.19%
Originated non-performing
loans 59.7 68.5 68.0 73.8 70.3
Commercial banking
allowance for loan losses
as a percentage of
originated commercial
banking loans 1.39 1.48 1.55 1.61 1.61
Retail allowance for loan
losses as a percentage of
originated retail loans 0.29 0.26 0.25 0.26 0.25
NET LOAN CHARGE-OFFS
Three Months Ended
Dec. Sept. June March Dec.
31, 30, 30, 31, 31,
(dollars in millions) 2011 2011 2011 2011 2010
Commercial Banking:
Equipment financing $4.5 $0.8 $2.3 $1.2 $3.0
Commercial real estate 3.9 4.6 9.3 3.3 2.6
Commercial and industrial 3.4 4.4 1.6 2.3 1.4
Total 11.8 9.8 13.2 6.8 7.0
Retail:
Residential mortgage 1.6 2.1 1.2 1.6 2.0
Home equity 0.7 1.1 0.8 0.8 1.1
Other consumer 0.7 0.4 0.3 0.4 0.8
Total 3.0 3.6 2.3 2.8 3.9
Total $14.8 $13.4 $15.5 $9.6 $10.9
Net loan charge-offs to
average loans
(annualized) 0.29% 0.27% 0.35% 0.22% 0.28%
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP
In addition to evaluating People's United Financial's results of
operations in accordance with U.S. generally
accepted accounting principles ("GAAP"), management routinely
supplements this evaluation with an analysis of
certain non-GAAP financial measures, such as the efficiency and
tangible equity ratios, tangible book value per
share and operating earnings metrics. Management believes these
non-GAAP financial measures provide information
useful to investors in understanding People's United Financial's
underlying operating performance and trends, and
facilitates comparisons with the performance of other banks and
thrifts. Further, the efficiency ratio and operating
earnings metrics are used by management in its assessment of
financial performance, including non-interest expense
control, while the tangible equity ratio and tangible book value
per share are used to analyze the relative strength
of People's United Financial's capital position.
The efficiency ratio, which represents an approximate measure of
the cost required by People's United Financial
to generate a dollar of revenue, is the ratio of (i) total non-
interest expense (excluding goodwill impairment
charges, amortization of other acquisition-related intangibles
and certain purchase accounting-related fair value
adjustments, losses on real estate assets and non-recurring
expenses) (the numerator) to (ii) net interest income on
a fully taxable equivalent basis (excluding certain purchase
accounting-related fair value adjustments) plus total
non-interest income (including the fully taxable equivalent
adjustment on bank-owned life insurance income, and
excluding gains and losses on sales of assets other than
residential mortgage loans, and non-recurring income)
(the denominator). People's United Financial generally considers
an item of income or expense to be non-recurring
if it is not similar to an item of income or expense of a type
incurred within the last two years and is not similar to
an item of income or expense of a type reasonably expected to be
incurred within the following two years.
Operating earnings exclude from net income those items that
management considers to be of such a non-recurring
or infrequent nature that, by excluding such items (net of income
taxes), People's United Financial's results can be
measured and assessed on a more consistent basis from period to
period. Items excluded from operating earnings,
which include, but are not limited to, merger-related expenses,
core system conversion costs, charges
related to executive-level management separation costs,
severance-related costs, and real estate asset writedowns,
are generally also excluded when calculating the efficiency
ratio. Operating earnings per share is calculated by
dividing operating earnings by the weighted average number of
dilutive common shares outstanding for the
respective period. Operating return on average assets is
calculated by dividing operating earnings (annualized) by
average assets. Operating return on average tangible
stockholders' equity is calculated by dividing operating
earnings (annualized) by average tangible stockholders' equity.
The operating dividend payout ratio is calculated by
dividing dividends paid by operating earnings for the respective
period.
Operating net interest margin excludes from the net interest
margin those items that management considers to be
of such an infrequent nature that, by excluding such items,
People's United Financial's net interest margin can be
measured and assessed on a more consistent basis from period to
period. Items excluded from operating net
interest margin include, but are not limited to, cost recovery
income on acquired loans and changes in the
accretable yield on acquired loans stemming from periodic cash
flow reassessments. Operating net interest margin
is calculated by dividing operating net interest income
(annualized) by average earning assets.
The tangible equity ratio is the ratio of (i) tangible
stockholders' equity (total stockholders' equity less goodwill
and other acquisition-related intangibles) (the numerator) to
(ii) tangible assets (total assets less goodwill and other
acquisition-related intangibles) (the denominator). Tangible
book value per share is calculated by dividing tangible
stockholders' equity by common shares (total common shares
issued, less common shares classified as treasury
shares and unallocated ESOP common shares).
In light of diversity in presentation among financial
institutions, the methodologies used by People's United
Financial for determining the non-GAAP financial measures
discussed above may differ from those used by other
financial institutions.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
EFFICIENCY RATIO
Twelve Months
Three Months Ended Ended
Dec. Sept. March Dec.
31, 30, June 30, 31, 31, Dec. 31, Dec. 31,
(dollars in
millions) 2011 2011 2011 2011 2010 2011 2010
Total non-
interest
expense $230.2 $231.9 $207.0 $202.8 $199.1 $871.9 $782.0
Adjustments:
Amortization of:
Other
acquisition-
related
intangibles (7.0) (7.0) (6.0) (5.9) (6.1) (25.9) (21.7)
Purchase accounting-
related
fair value
adjustments
(1) (0.8) (0.8) (0.8) (0.8) (0.8) (3.2) (3.2)
Merger-
related
expenses (13.3) (20.1) (6.4) (3.1) (4.8) (42.9) (23.3)
Severance-
related costs (3.9) (1.4) - - - (5.3) -
Executive-
level
separation
costs (1.0) - (2.8) - - (3.8) (15.3)
Real estate
asset
writedowns (4.8) - - - - (4.8) -
Other (2) (4.0) (2.3) (1.9) (2.1) (2.7) (10.3) (9.4)
Total $195.4 $200.3 $189.1 $190.9 $184.7 $775.7 $709.1
Net interest
income (FTE
basis) (3) $244.7 $242.7 $222.5 $221.5 $190.7 $931.4 $702.3
Total non-
interest
income 71.7 84.7 76.6 74.6 68.1 307.6 270.0
Total revenues 316.4 327.4 299.1 296.1 258.8 1,239.0 972.3
Adjustments:
BOLI FTE
adjustment
(3) 0.8 0.9 0.8 0.6 0.5 3.1 3.6
Purchase accounting-
related
fair value
adjustments
(1) (6.0) (7.3) (4.7) (5.0) (0.6) (23.0) 3.0
Net security
(gains)
losses - (8.6) (0.1) (0.1) 1.0 (8.8) 1.0
Losses (gains)
on sales of
acquired
loans 0.4 4.8 (7.2) (5.5) - (7.5) -
Other (4) (0.1) 0.1 - 2.2 - 2.2 -
Total $311.5 $317.3 $287.9 $288.3 $259.7 $1,205.0 $979.9
Efficiency
ratio 62.7% 63.1% 65.7% 66.2% 71.1% 64.4% 72.4%
(1) Reflects the impact of amortization and accretion associated with
certain purchase accounting-related fair value adjustments
recognized in connection with past business combinations. Amounts
deducted from non-interest expense represent the impact of
adjustments made to acquired premises and equipment to reflect the fair
value of such assets and which generally have a
remaining life of approximately 6 years at December 31, 2011. Amounts
added to (deducted from) total revenues represent the
impact of adjustments made to loans acquired prior to January 1, 2010
and liabilities assumed (i.e. time deposits, FHLB
advances, repurchase agreements and subordinated notes and debentures)
as a result of interest rate-related changes applicable
to such instruments and which generally have a weighted average
remaining life of approximately 7 years at December 31,
2011. These adjustments are made because management believes such income
and expense amounts are not relevant for
purposes of evaluating operating efficiency.
(2) Items classified as "other" and deducted from non-interest expense
include, as applicable, certain franchise taxes, real estate
owned expenses and contract termination costs.
(3) Fully taxable equivalent.
(4) Items classified as "other" and added to (deducted from) total
revenues include, as applicable, asset write-offs, gains associated
with the sale of branch locations and mortgage servicing rights, and
interest on an income tax refund.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING EARNINGS
Twelve Months
Three Months Ended Ended
Dec. Sept. March Dec.
31, 30, June 30, 31, 31, Dec. 31, Dec. 31,
(dollars in
millions,
except per
share data) 2011 2011 2011 2011 2010 2011 2010
Net income, as
reported $43.0 $52.9 $51.2 $51.7 $32.0 $198.8 $85.7
Adjustments to arrive
at operating
earnings:
Merger-
related
expenses 13.3 20.1 6.4 3.1 4.8 42.9 23.3
Severance-
related costs 3.9 1.4 - - - 5.3 -
Executive-
level
separation
costs 1.0 - 2.8 - - 3.8 15.3
Real estate
asset
writedowns 4.8 - - - - 4.8 -
Core system
conversion
costs - - - - 2.2 - 20.3
Total pre-tax
adjustments 23.0 21.5 9.2 3.1 7.0 56.8 58.9
Tax effect (7.3) (7.1) (3.1) (1.0) (2.3) (18.5) (19.2)
Total
adjustments,
net of tax 15.7 14.4 6.1 2.1 4.7 38.3 39.7
Operating
earnings $58.7 $67.3 $57.3 $53.8 $36.7 $237.1 $125.4
Earnings per
share, as
reported $0.12 $0.15 $0.15 $0.15 $0.09 $0.57 $0.24
Adjustments to arrive
at
operating earnings per
share:
Merger-
related
expenses 0.03 0.04 0.02 - 0.01 0.09 0.04
Severance-
related costs 0.01 - - - - 0.01 -
Executive-
level
separation
costs - - - - - - 0.04
Real estate
asset
writedowns 0.01 - - - - 0.01 -
Core system
conversion
costs - - - - - - 0.03
Total
adjustments
per share 0.05 0.04 0.02 - 0.01 0.11 0.11
Operating
earnings per
share $0.17 $0.19 $0.17 $0.15 $0.10 $0.68 $0.35
Average total
assets $27,285 $27,355 $24,853 $24,623 $22,961 $26,028 $22,016
Operating return on
average assets
(annualized) 0.86% 0.98% 0.92% 0.87% 0.64% 0.91% 0.57%
OPERATING NET INTEREST
MARGIN
Twelve Months
Three Months Ended Ended
Dec. Sept. March Dec.
31, 30, June 30, 31, 31, Dec. 31, Dec. 31,
(dollars in
millions) 2011 2011 2011 2011 2010 2011 2010
Net interest
income (FTE
basis) (1) $244.7 $242.7 $222.5 $221.5 $190.7 $931.4 $702.3
Adjustments to arrive
at
operating net interest
income:
Cost recovery
income (5.0) - - - - (5.0) -
Changes in
accretable
yield - - (2.2) (9.0) - (11.2) -
Total
adjustments (5.0) - (2.2) (9.0) - (16.2) -
Operating net
interest
income $239.7 $242.7 $220.3 $212.5 $190.7 $915.2 $702.3
Net interest
margin, as
reported (2) 4.16% 4.11% 4.13% 4.16% 3.87% 4.14% 3.70%
Adjustments to arrive
at
operating net interest
margin: (2)
Cost recovery
income (0.09) - - - - (0.02) -
Changes in
accretable
yield - - (0.04) (0.16) - (0.05) -
Total
adjustments (0.09) - (0.04) (0.16) - (0.07) -
Operating net
interest
margin (2) 4.07% 4.11% 4.09% 4.00% 3.87% 4.07% 3.70%
Total earning
assets $23,542 $23,614 $21,564 $21,274 $19,697 $22,497 $18,989
(1) Fully taxable equivalent.
(2) Three month margins are annualized.
People's United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING RETURN ON AVERAGE TANGIBLE STOCKHOLDERS' EQUITY
Twelve Months
Three Months Ended Ended
Dec. Sept. March Dec.
31, 30, June 30, 31, 31, Dec. 31, Dec. 31,
(dollars in
millions) 2011 2011 2011 2011 2010 2011 2010
Operating
earnings $58.7 $67.3 $57.3 $53.8 $36.7 $237.1 $125.4
Average
stockholders'
equity $5,302 $5,515 $5,177 $5,185 $5,335 $5,271 $5,368
Less: Average
goodwill and
average other
acquisition-
related
intangibles 2,148 2,154 1,950 1,957 1,829 2,053 1,753
Average tangible
stockholders'
equity $3,154 $3,361 $3,227 $3,228 $3,506 $3,218 $3,615
Operating return
on average
tangible
stockholders'
equity
(annualized) 7.4% 8.0% 7.1% 6.7% 4.2% 7.4% 3.5%
OPERATING
DIVIDEND PAYOUT
RATIO
Twelve Months
Three Months Ended Ended
Dec. Sept. March Dec.
31, 30, June 30, 31, 31, Dec. 31, Dec. 31,
(dollars in
millions) 2011 2011 2011 2011 2010 2011 2010
Dividends paid $54.8 $57.4 $54.5 $54.2 $55.2 $220.9 $218.1
Operating
earnings $58.7 $67.3 $57.3 $53.8 $36.7 $237.1 $125.4
Operating
dividend payout
ratio 93.4% 85.3% 95.1% 100.7% 150.4% 93.2% 173.9%
TANGIBLE EQUITY
RATIO
Dec. Sept. March Dec.
31, 30, June 30, 31, 31,
(dollars in
millions) 2011 2011 2011 2011 2010
Total
stockholders'
equity $5,225 $5,291 $5,194 $5,160 $5,219
Less: Goodwill
and other
acquisition-
related
intangibles 2,174 2,151 1,947 1,953 1,962
Tangible
stockholders'
equity $3,051 $3,140 $3,247 $3,207 $3,257
Total assets $27,568 $27,213 $25,323 $24,962 $25,037
Less: Goodwill
and other
acquisition-
related
intangibles 2,174 2,151 1,947 1,953 1,962
Tangible assets $25,394 $25,062 $23,376 $23,009 $23,075
Tangible equity
ratio 12.0% 12.5% 13.9% 13.9% 14.1%
TANGIBLE BOOK
VALUE PER SHARE
Dec. Sept. March Dec.
31, 30, June 30, 31, 31,
(in millions,
except per
share data) 2011 2011 2011 2011 2010
Tangible
stockholders'
equity $3,051 $3,140 $3,247 $3,207 $3,257
Common shares
issued 395.42 395.46 377.02 376.95 376.62
Less: Shares
classified as
treasury shares 38.03 38.07 22.01 22.01 17.49
Unallocated ESOP
shares 8.71 8.80 8.89 8.97 9.06
Common shares 348.68 348.59 346.12 345.97 350.07
Tangible book
value per share $8.75 $9.01 $9.38 $9.27 $9.30
SOURCE People's United Financial, Inc.
