Posted July 23, 2020


People’s United Financial Reports Second Quarter Net Income of $89.9 Million, or $0.21 per Common Share

Operating Earnings of $0.24 per Common Share

People's United Bank in the News

View Q2 2020 Financial Schedule

  • Increased pre-provision net revenue 9 percent from a year ago to $191.2 million and 15 percent on an operating basis to $209.7 million.
  • Sustained excellent asset quality as evidenced by net loan charge-offs to average total loans of 8 basis points. Provision of $80.8 million primarily reflects the impact of COVID-19 and further strengthens the allowance for credit losses to total loans by 14 basis points to 0.91 percent.
  • Maintained a strong funding and liquidity profile, which benefited from period-end deposit balances growing $5.2 billion or 12 percent linked-quarter.
  • Funded nearly 18,000 Paycheck Protection Program (PPP) loans totaling over $2.6 billion as of July 15th, of which approximately 80 percent were small business loans under $150,000 and supported the paychecks of more than 260,000 employees across the Northeast.

BRIDGEPORT, CT., JULY 23, 2020 – People's United Financial, Inc. (NASDAQ: PBCT) today reported results for the second quarter 2020. These results along with comparison periods are summarized below:

“Our performance in the second quarter is indicative of the strength and resilience of People’s United,” said Jack Barnes, Chairman and Chief Executive Officer. “Our employees continue to display their extensive know-how to deliver financial solutions despite the many challenges presented by COVID-19. From our frontline personnel providing exceptional service in a socially distant environment, to our robotic process automation team developing bots to expedite the processing of PPP loans, the adaptability of our employees has been remarkable. Consistent with our history of providing support in periods of need, we are committed to helping customers and communities navigate through this crisis. In addition to being among a small group of banks that were first to submit a significant number of PPP applications, we granted forbearance, where appropriate, for both retail and commercial loans and continue to assess the needs of customers that may require extended relief. We also registered for the Main Street Lending program to further support small and mid-sized businesses. Clearly, the duration of the pandemic is unpredictable and its total impact on the economy is unknown. However, we remain confident that our long-held conservative underwriting philosophy and diversified loan portfolio comprised of high-quality, cycle-tested borrowers will once again differentiate our franchise throughout the uncertain times ahead.”

“Our second quarter financial results compared to the prior year quarter were highlighted by a 15 percent increase in operating pre-provision net revenue and a 230 basis point improvement in the efficiency ratio,” stated David Rosato, Senior Executive Vice President and Chief Financial Officer. “These results reflect higher net interest income and our continued success controlling costs. Conversely, non-interest income declined from a year ago due to decreased customer activity, fee waivers related to COVID-19 relief measures and lower wealth management fees. Net interest margin of 3.05 percent was down from 3.12 percent in the first quarter. The margin compression reflects the downward repricing of floating rate loans, partially offset by meaningful reductions in deposit and borrowing costs. Period-end loans and deposits increased 3 percent and 12 percent, respectively, linked-quarter. Excluding PPP, loans decreased 3 percent largely driven by lower commercial real estate balances and our planned reduction in residential mortgages. Deposits primarily benefited from PPP funds, federal stimulus payments and higher municipal balances.”

The Board of Directors declared a $0.18 per common share quarterly dividend payable August 15, 2020 to shareholders of record on August 3, 2020. Based on the closing stock price on July 22, 2020, the dividend yield on People's United Financial common stock is 6.2 percent.

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 $61 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.

2Q 2020 Financial Highlights

Summary

  • Net income totaled $89.9 million, or $0.21 per common share.
    • Net income available to common shareholders totaled $86.4 million.
    • Operating earnings totaled $101.0 million, or $0.24 per common share (see page 16 of the Financial Schedule).
  • Net interest income totaled $405.6 million in 2Q20 compared to $396.0 million in 1Q20.
  • Net interest margin decreased seven basis points from 1Q20 to 3.05% reflecting:
    • Lower yields on the loan portfolio (decrease of 40 basis points).
    • Lower yields on the securities portfolio (decrease of seven basis points).
    • Lower rates on deposits (increase of 29 basis points).
    • Lower rates on borrowings (increase of 11 basis points).
  • Provision for credit losses totaled $80.8 million.
    • Allowance for credit losses increased $72.3 million, primarily reflecting the impact of COVID-19
    • Net loan charge-offs totaled $8.5 million.
    • Net loan charge-off ratio of 0.08% in 2Q20.
  • Non-interest income totaled $89.6 million in 2Q20 compared to $123.8 million in 1Q20.
    • Bank service charges decreased $7.7 million.
    • Customer interest rate swap income decreased $6.1 million.
    • Insurance revenue decreased $1.9 million.
    • Commercial banking lending fees decreased $1.5 million.
    • Other non-interest income includes net gains on loans held-for-sale of $16.9 million in 1Q20.
    • At June 30, 2020, assets under discretionary management totaled $8.7 billion.
  • Non-interest expense totaled $304.0 million in 2Q20 compared to $320.1 million in 1Q20.
    • Operating non-interest expense totaled $285.5 million in 2Q20 and $302.2 million in 1Q20 (see page 16 of the Financial Schedule).
    • Compensation and benefits expense, excluding $1.0 million and $0.4 million of merger-related expenses in 2Q20 and 1Q20, respectively, decreased $6.7 million, primarily reflecting lower payroll and benefit-related costs in 2Q20.
    • Occupancy and equipment expense, excluding $0.2 million and $0.5 million of merger-related expenses in 2Q20 and 1Q20, respectively, decreased $2.7 million.
    • Professional and outside services expense, excluding $3.6 million and $15.1 million of merger-related expenses in 2Q20 and 1Q20, respectively, decreased $1.3 million.
    • Other non-interest expense includes merger-related expenses of $13.7 million in 2Q20 and $1.9 million in 1Q20 (see page 16 of the Financial Schedule).
    • The efficiency ratio was 53.5% for 2Q20 compared to 54.0% for 1Q20 and 55.8% for 2Q19 (see page 16 of the Financial Schedule).
  • The effective income tax rate was 18.6% for 2Q20 and 20.4% for the first six months of 2020, compared to 20.2% for the full-year of 2019.
  • Commercial Banking

  • Commercial loans totaled $33.5 billion at June 30, 2020, a $1.8 billion increase from March 31, 2020.
    • Paycheck Protection Plan loans totaled $2.5 billion at June 30, 2020.
    • The mortgage warehouse portfolio increased $441 million.
    • The equipment financing portfolio decreased $133 million.
    • The New York multifamily portfolio decreased $71 million.
  • Average commercial loans totaled $32.9 billion in 2Q20, a $2.4 billion increase from 1Q20.
    • Paycheck Protection Plan loans averaged $1.8 billion in 2Q20.
    • The average mortgage warehouse portfolio increased $928 million.
    • The average equipment financing portfolio increased $18 million.
    • The average New York multifamily portfolio decreased $70 million.
  • Commercial deposits totaled $21.0 billion at June 30, 2020 compared to $17.7 billion at March 31, 2020.
  • The ratio of non-accrual commercial loans to total commercial loans was 0.63% at June 30, 2020 compared to 0.48% at March 31, 2020.
  • Non-performing commercial assets totaled $224.4 million at June 30, 2020 compared to $163.5 million at March 31, 2020.
  • For the commercial loan portfolio, the allowance for credit losses as a percentage of commercial loans was 0.83% at June 30, 2020 compared to 0.67% at March 31, 2020.
  • The commercial allowance for credit losses represented 131% of non-accrual commercial loans at June 30, 2020 compared to 140% at March 31, 2020.

Retail Banking

  • Residential mortgage loans totaled $9.6 billion at June 30, 2020, a $458 million decrease from March 31, 2020.
    • Average residential mortgage loans totaled $9.8 billion in 2Q20, a $415 million decrease from 1Q20.
    • Home equity loans totaled $2.2 billion at June 30, 2020, a $122 million decrease from March 31, 2020.
    • Average home equity loans totaled $2.3 billion in 2Q20, a $91 million decrease from 1Q20.
  • Retail deposits totaled $28.9 billion at June 30, 2020 compared to $27.0 billion at March 31, 2020.
  • The ratio of non-accrual residential mortgage loans to residential mortgage loans was 0.65% at June 30, 2020 compared to 0.66% at March 31, 2020.
  • The ratio of non-accrual home equity loans to home equity loans was 1.01% at June 30, 2020 compared to 0.94% at March 31, 2020.
  • For the retail loan portfolio, the allowance for credit losses as a percentage of retail loans was 1.14% at June 30, 2020 compared to 1.03% at March 31, 2020.
  • The retail allowance for credit losses represented 160% of non-accrual retail loans at June 30, 2020 compared to 146% at March 31, 2020.

Conference Call

On July 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.

© 2020 People's United Bank, N.A. | Member FDIC | Equal Housing Lender icon Equal Housing Lender