During the quarter, the Company repurchased 19.8 million common shares through March 9th at a total cost of $304 million, completing the common stock repurchase program authorized by the Company’s Board of Directors in 2019. In addition, the Board voted to increase the common stock dividend for the 27th consecutive year to an annual rate of $0.72 per share. Based on the closing stock price on April 22, 2020, the dividend yield on People's United Financial common stock is 6.6 percent. The quarterly dividend of $0.18 per share is payable May 15, 2020 to shareholders of record on May 1, 2020.
People's United Bank, N.A. is a subsidiary of People's United Financial, Inc., a diversified, community-focused financial services company headquartered in the Northeast with over $60 billion in assets. Founded in 1842, People’s United Bank offers commercial and retail banking through a network of over 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine, as well as wealth management and insurance solutions. The company also provides specialized commercial services to customers nationwide.
1Q 2020 Financial Highlights
- Net income totaled $130.4 million, or $0.30 per common share.
- Net income available to common shareholders totaled $126.9 million.
- Operating earnings totaled $141.1 million, or $0.33 per common share (see page 13 of the Financial Schedule).
- Net interest income totaled $396.0 million in 1Q20 compared to $382.7 million in 4Q19.
- Net interest margin decreased two basis points from 4Q19 to 3.12% reflecting:
- Lower rates on deposits (increase of six basis points).
- Lower rates on borrowings (increase of two basis points).
- Lower yields on the loan portfolio (decrease of eight basis points).
- One less calendar day in 1Q20 (decrease of two basis points).
- Provision for credit losses totaled $33.5 million..
- Provision increase of $22.9 million reflects the application of CECL and the impact of COVID-19.
- Net loan charge-offs totaled $10.6 million.
- Net loan charge-off ratio of 0.10% in 1Q20.
- Non-interest income totaled $123.8 million in 1Q20 compared to $124.2 million in 4Q19.
- Insurance revenue increased $3.4 million.
- Investment management fees decreased $1.2 million.
- Bank service charges decreased $0.9 million.
- Commercial banking lending fees decreased $0.8 million.
- Other non-interest income includes net gains on loans held-for-sale of $16.9 million in 1Q20 and a $7.6 million net gain on the sale of eight branches in 4Q19.
- At March 31, 2020, assets under discretionary management totaled $7.8 billion.
- Non-interest expense totaled $320.1 million in 1Q20 compared to $325.7 million in 4Q19.
- Operating non-interest expense totaled $302.2 million in 1Q20 and $286.6 million in 4Q19 (see page 13 of the Financial Schedule).
- Compensation and benefits expense, excluding $0.4 million and $7.5 million of merger-related expenses in 1Q20 and 4Q19, respectively, increased $9.6 million, primarily reflecting seasonally higher payroll and benefit-related costs in 1Q20.
- Regulatory assessment expense increased $1.4 million.
- Professional and outside services expense, excluding $15.1 million and $5.6 million of merger-related expenses in 1Q20 and 4Q19, respectively, decreased $0.6 million.
- Other non-interest expense includes merger-related expenses of $1.9 million in 1Q20 and $8.9 million in 4Q19. Also included in 4Q19 is a $16.5 million charge associated with the complete write-down of an intangible asset (see page 13 of the Financial Schedule).
- The efficiency ratio was 54.0% for 1Q20 compared to 53.7% for 4Q19 and 57.3% for 1Q19 (see page 13 of the Financial Schedule).
- The effective income tax rate was 21.5% for 1Q20 compared to 20.2% for the full-year of 2019.
- Commercial loans totaled $31.7 billion at March 31, 2020, an increase of $1.0 billion from December 31, 2019.
- The mortgage warehouse portfolio increased $596 million.
- The equipment financing portfolio increased $102 million.
- The New York multifamily portfolio decreased $45 million.
- Average commercial loans totaled $30.5 billion in 1Q20, an increase of $1.1 billion from 4Q19.
- The average equipment financing portfolio increased $131 million.
- The average mortgage warehouse portfolio decreased $227 million.
- The average New York multifamily portfolio decreased $42 million.
- Commercial deposits totaled $17.7 billion at March 31, 2020 compared to $16.6 billion at December 31, 2019.
- The ratio of non-performing commercial loans to commercial loans was 0.48% at March 31, 2020.
- Non-performing commercial assets totaled $163.5 million at March 31, 2020.
- For the commercial loan portfolio, the allowance for credit losses as a percentage of commercial loans was 0.67% at March 31, 2020.
- The commercial allowance for credit losses represented 140% of non-performing commercial loans at March 31, 2020.
- Residential mortgage loans totaled $10.1 billion at March 31, 2020, a decrease of $236 million from December 31, 2019.
- Average residential mortgage loans totaled $10.0 billion in 4Q19, an increase of $626 million from 3Q19.
- Home equity loans totaled $2.3 billion at March 31, 2020, a decrease of $57 million from December 31, 2019.
- Average home equity loans totaled $2.4 billion in 1Q20, an increase of $108 million from 4Q19.
- Retail deposits totaled $27.0 billion at both March 31, 2020 and December 31, 2019.
- The ratio of non-performing residential mortgage loans to residential mortgage loans was 0.66% at March 31, 2020.
- The ratio of non-performing home equity loans to home equity loans was 0.94% at March 31, 2020.
- For the retail loan portfolio, the allowance for credit losses as a percentage of retail loans was 1.03% at March 31, 2020.
- The retail allowance for credit losses represented 146% of non-performing retail loans at March 31, 2020.
On April 23, 2020, 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, international, 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; (10) changes in regulation resulting from or relating to financial reform legislation; and (11) the COVID-19 pandemic and its effect on the economic and business environment in which we operate. 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.