January 20, 2011

January 20, 2011 

People's United Financial Reports Fourth Quarter Earnings Of $32 Million Or $0.09 Per Share

Realizes operating earnings of $0.10 per share, excluding one-time costs Announces acquisition of Danvers Bancorp, Inc. 
Board of Directors authorizes additional share repurchase


Click here to see the fourth quarter Financial Schedule.

BRIDGEPORT, CT. – People's United Financial, Inc. (NASDAQ: PBCT) today announced net income of $32.0 million, or $0.09 per share, for the fourth quarter of 2010, compared to $24.1 million, or $0.07 per share, for the third quarter of 2010, and $24.9 million, or $0.07 per share, for the fourth quarter of 2009.  Included in each of these quarter's results are pre-tax  merger-related expenses and core system conversion costs totaling $7.0 million, $5.3 million and $4.5 million, respectively.  Excluding the effect of these items, net income would have been $36.7 million, or $0.10 per share, for the fourth quarter of 2010, $27.7 million, or $0.08 per share for the third quarter of 2010 and $28.0 million, or $0.08 per share, for the fourth quarter of 2009.

For the year ended December 31, 2010, net income totaled $85.7 million, or $0.24 per share, compared to $101.2 million, or $0.30 per share, for 2009.  Included in both the 2010 and 2009 results are pre-tax merger-related expenses, core system conversion costs and one-time charges totaling $58.9 million and $4.5 million, respectively.  Excluding the effect of these items, net income would have been $125.4 million, or $0.35 per share, for 2010 and $104.3 million, or $0.31 per share, for 2009. 

As previously reported, People's United Financial completed its acquisitions of Smithtown Bancorp, Inc. and LSB Corporation on November 30, 2010.  Accordingly, Smithtown's and LSB's results of operations are included as of the acquisition date, and prior period results have not been restated to include Smithtown and LSB. 

People's United Financial announced today a definitive agreement to acquire Danvers Bancorp, Inc. based in Danvers, Massachusetts.  Further information regarding this acquisition is included in a separate release. 

People's United Financial's Board of Directors has authorized an additional repurchase of common stock.  Up to 5 percent of People’s United Financial's then-outstanding common stock, or up to 17.5 million shares, can be repurchased, either directly or through agents, in the open market at prices and terms satisfactory to management.  Under the stock repurchase authorization announced in April 2008, 14.3 million shares out of a maximum of 17.3 million shares authorized, at a total cost of $191.2 million, had been repurchased as of December 31, 2010.

The Board of Directors of People's United Financial declared a $0.1550 per share quarterly dividend, payable February 15, 2011 to shareholders of record on February 1, 2011.  Based on the closing stock price on January 19, 2011, the dividend yield on People's United Financial common stock is 4.4 percent. 

"Our announcement today of the acquisition of Danvers Bancorp furthers our strategy of acquiring financial institutions in attractive markets and continues to build on what was an exciting and transformational 2010 for the bank," stated Jack Barnes, President and Chief Executive Officer.  "The successful completion of our core system conversion and the rebranding of our branches throughout New England to People's United Bank, in addition to closing four acquisitions during 2010, position us well for future growth." 

Barnes added, "Our performance throughout 2010 continues to reflect the benefits from our focused commercial, wealth management and retail banking strategy.  Excluding acquired loans, our commercial banking portfolio increased 7 percent on an annualized basis this quarter, while our residential mortgage portfolio increased 14 percent, and we continue to strengthen our position in the critical Boston and New York markets."

 Barnes concluded, "We operate from a position of competitive strength characterized by our strong business fundamentals, ability to further leverage our brand in attractive markets and our prospects for organic growth.  Furthermore, we have demonstrated our ability to prudently and effectively deploy capital through acquisitions, adherence to a strong dividend policy and share repurchases."

 "On an operating basis earnings were $37 million or 10 cents per share this quarter," said Paul D. Burner, Senior Executive Vice President and Chief Financial Officer.  "Significant drivers of the company's performance in the fourth quarter were an improvement in the net interest margin and lower net loan charge-offs.  The net interest margin improved 12 basis points to 3.85 percent, primarily reflecting a reduction in our cost of deposits and the partial benefit from our two acquisitions completed during the fourth quarter."

 Commenting on asset quality, Burner stated, "Our non-performing loans declined on a sequential quarter basis for the first time since September 2009, an indication of what we believe is stabilization across the loan portfolio.  In addition, net loan charge-offs this quarter were the lowest since the first quarter of 2010."

 Loans acquired in connection with acquisitions have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio's historical allowance for loan losses.  As such, selected asset quality metrics have been highlighted to distinguish between the 'originated' portfolio and the 'acquired' portfolios.  For the originated loan portfolio, representing all loans other than those acquired, non-performing loans totaled $245.2 million at December 31, 2010, and the ratio of originated non-performing loans to originated loans was 1.68 percent, compared to $251.4 million and 1.77 percent, respectively, at September 30, 2010.  Non-performing loans in the acquired loan portfolios, which represent those 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 $359.8 million at December 31, 2010.

 Non-performing assets totaled $303.1 million at December 31, 2010, down from $312.0 million at September 30, 2010.  Non-performing assets equaled 2.07 percent of originated loans, REO and repossessed assets at December 31, 2010 compared to 2.18 percent at September 30, 2010.  At December 31, 2010, the allowance for loan losses as a percentage of originated loans was 1.18 percent and as a percentage of originated non-performing loans was 70 percent, compared to 1.21 percent and 69 percent, respectively, at September 30, 2010.

Fourth quarter net loan charge-offs totaled $10.9 million compared to $21.8 million in the third quarter of 2010.  Net loan charge-offs as a percent of average loans on an annualized basis were 0.28 percent in the fourth quarter of 2010 compared to 0.57 percent in this year's third quarter.  The level of the allowance for loan losses is unchanged from September 30, 2010.

In the fourth quarter of 2010, return on average tangible assets was 0.61 percent and return on average tangible stockholders' equity was 3.7 percent, compared to 0.48 percent and 2.7 percent, respectively, for the third quarter of 2010.  At December 31, 2010, People's United Financial's tangible equity ratio stood at 14.1 percent.

Conference Call

On January 21, 2011, at 11 a.m., Eastern Time, People's United Financial will host a conference call to discuss this earnings announcement and our acquisition 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 2010 Financial Highlights

 Summary

  • Net income totaled $32.0 million, or $0.09 per share.
    • Operating earnings were $36.7 million, or $0.10 per share.
  • Net interest income totaled $189.8 million.
    • Net interest margin increased 12 basis points from 3Q10 to 3.85%.
    • The interest cost on deposits declined 6 basis points from 3Q10.
  • Provision for loan losses totaled $10.9 million.
    • Net loan charge-offs totaled $10.9 million in 4Q10.
  • Non-interest income totaled $75.9 million in both 4Q10 and 3Q10.
  • Non-interest expense totaled $206.9 million in 4Q10 compared to $194.2 million in 3Q10.
    • 4Q10 and 3Q10 include a total of $7.0 million and $5.3 million, respectively, of merger-related expenses and core system conversion costs.
  • Effective income tax rate was 33.2% in 4Q10 and 32.5% in 2010.
    • Excluding a $1.2 million non-taxable BOLI death benefit recorded in 2Q10, the income tax rate was 32.8% in 2010.


Commercial Banking

  • Average commercial banking loans increased $580 million from 3Q10 to $11.1 billion.
    • Excluding acquired loans, commercial banking loans increased $175 million from
      September 30, 2010.
  • Non-performing commercial banking assets, excluding acquired non-performing loans, totaled
    $193.1 million at December 31, 2010, a $12.0 million decrease from September 30, 2010.
  • The ratio of originated non-performing commercial banking loans to originated commercial banking loans was 1.57% at December 31, 2010 compared to 1.59% at September 30, 2010.
  • Net loan charge-offs totaled $7.0 million, or 0.25% annualized, of average commercial banking loans in 4Q10, compared to $18.2 million, or 0.69% annualized, in 3Q10.

 
Retail & Business Banking

  • Average residential mortgage loans totaled $2.6 billion, a $148 million increase from 3Q10.
    • Excluding acquired loans, residential mortgage loans increased $98 million from
      September 30, 2010.
    • Net loan charge-offs totaled $2.0 million, or 0.30% annualized, of average residential
      mortgage loans.
    • The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 3.17% at December 31, 2010 compared to 3.68% at September 30, 2010.
  • Average home equity loans totaled $2.0 billion, unchanged from 3Q10.
    • Net loan charge-offs totaled $1.1 million, or 0.23% annualized, of average home equity loans.


Wealth Management

  • Wealth Management income decreased $1.0 million from 3Q10.
    • Investment management fees and brokerage commission increased $0.3 million and  $0.1 million, respectively, while insurance revenue decreased $1.4 million (reflecting the seasonal nature of insurance renewals).
  • Assets managed and administered, which are not reported as assets of People's United Financial, totaled $17.1 billion at both December 31, 2010 and September 30, 2010.

 

People's United Financial, a diversified financial services company with $25 billion in assets, provides commercial banking, retail and business banking, and wealth management services through a network of nearly 340 branches in Connecticut, Vermont, New York, New Hampshire, Maine and Massachusetts. Through its subsidiaries, People's United Financial provides equipment financing, asset management, brokerage and financial advisory services, and insurance services. 

 

Additional Information About the Transaction

The proposed transaction will be submitted to the stockholders of Danvers Bancorp for their consideration.  In connection with the proposed merger with Danvers Bancorp, Inc., People's United Financial will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a proxy statement of Danvers Bancorp that also constitutes a prospectus of People's United Financial. Danvers Bancorp will mail the proxy statement/prospectus to its stockholders.  Investors and security holders are urged to read the proxy statement/prospectus regarding the proposed merger when it becomes available, as well as other documents filed with the SEC, because they will contain important information.  You may obtain a free copy of the proxy statement/prospectus (when available) and other related documents filed by People's United Financial and Danvers Bancorp with the SEC at the SEC's website at www.sec.gov.  The proxy statement/prospectus (when it is available) and the other documents may also be obtained for free by accessing People's United Financial's web site at www.peoples.com under the tab “Investor Relations” and then under the heading “Financial Information” or by accessing Danvers Bancorp’s web site at www.danversbank.com under the tab “Investor Relations” and then under the heading “SEC Filings.”


Participants in the Transactions

People's United Financial, Danvers Bancorp and their respective directors, executive officers and certain other members of management and employees may be deemed “participants” in the solicitation of proxies from Danvers Bancorp's stockholders in favor of the merger with Danvers Bancorp. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Danvers Bancorp stockholders in connection with the proposed merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about the executive officers and directors of People's United Financial in its Annual Report on Form 10-K for the year ended December 31, 2009 and in its definitive proxy statement filed with the SEC on March 23, 2010.  You can find information about Danvers Bancorp's executive officers and directors in its Annual Report on Form 10-K for the year ended December 31, 2009 and in its definitive proxy statement filed with the SEC on April 16, 2010.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities.

For additional factors that may affect future results, please see filings made by People's United Financial and Danvers Bancorp with the SEC, including People's United Financial's Annual Report on Form 10-K for the year ended December 31, 2009 and Danvers Bancorp's Annual Report on Form 10-K for the year ended December 31, 2009.  People's United Financial and Danvers Bancorp undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or other changes.

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) possible changes in regulation resulting from or relating to recently enacted 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.

Other Media Resources


JOIN OUR NEWSLETTER