EXHIBIT 99.2
Investor Presentation dated October 20, 2011
3rd Quarter 2011 Earnings Conference Call October 20, 2011
Forward Looking Statement
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.
Third Quarter 2011 Results
Overview / 3Q 2011 vs. 2Q 2011 Operating earnings of $67.3 million or $0.19 per share
Net interest margin of 4.11%; down 2 bps Total loan growth of $655MM1, 15% annualized growth rate
Total deposit growth of $269MM1, 6% annualized growth rate
Strategic securities sale of $507 million of MBS to reduce premium at risk
? Prepaid $284MM of high-rate, callable FHLB advances assumed via RiverBank and Danvers acquisitions
Efficiency ratio improved to 63.1% from 65.7%
NPAs as a percentage of originated loans, REO and repossessed assets decreased to 1.88% from 2.05%
Operating dividend payout ratio declined to 85% from 95%
Repurchased 15.8 million shares of common stock at a weighted average
price of $11.81
1 |
| Excludes the impact of the Danvers acquisition which closed July 1, 2011 |
Recent Initiatives
Completed the system conversion of Danvers without issue
Filed application for national bank charter better reflecting the commercial nature of our enterprise
Moving deposit rates lower across all deposit products
Received Board authorization for additional 5% share repurchase program
Signed a lease for our first de novo branch in Manhattan at 250 Park Ave. (Park/47th St.)
Changed peer group to include more commercially oriented banks, exclude traditional thrift business models (see Appendix)
Net Interest Margin
(0.04%)
(0.04%)
0.03%
0.03%
4.13%
4.11%
4 |
|
2Q 2011 Margin Accretable Yield Earning Asset Deposit Rates Danvers 3Q 2011 Margin
Reassessments Yield & Mix (ex Danvers)
(ex Danvers)
Net Interest Margin* (%)
Last Five Quarters
4.16
4.13
4.11
3.74
3.87
5 |
|
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Operating Margin * —Reported Margin
* |
| Excludes the impact of accretable yield reassessments |
Acquired Loan Portfolio
Actual Credit Experience vs. Expectations
Acquired loans initially recorded at fair value (inclusive of related credit mark) without carryover of historical ALLL
Accounting model is cash-flow based:
Contractual cash flows (principal & interest) less Expected cash flows (principal & interest) = non-accretable difference (utilized to absorb actual portfolio losses)
> Expected cash flows (principal & interest) less fair value = accretable yield
Cash flows are both acquisition and pool specific
> Expected cash flows are regularly reassessed and compared to actual cash collections
Better than expected credit experience results in reclass of non-accretable difference to accretable yield (prospective yield adjustment over the life of the loans)
Remaining Remaining Remaining Charge-offs
As of 9/30/2011 Carrying Accretable Non-Accretable Non-Accretable Incurred Since
(in $ millions) Amount Yield Difference NPLsa Difference/NPLs Acquisition
FinFed (2/18/10) $390.3 $37.1 $19.5 $54.5 35.8% $11.4
Butler (4/16/10) 79.2 26.2 30.3 15.5 195.5% 3.6
RiverBank (11/30/10) 427.8 110.8 14.2 10.5 135.2% 2.6
Smithtown (11/30/10)b 1,266.8 678.7 273.6 146.5 186.8% 104.1
Danvers (7/1/11) 1,805.6 606.0 35.9 14.6 245.9% 0.2
Total $3,969.7 $1,458.8 $373.5 $241.6
(a) Represent contractual amounts; loans meet People’s United Financial’s definition of a non-performing loan but are not subject to classification as non-accrual in the same manner as originated loans. Rather, these loans are considered to be accruing loans because their interest income relates to the accretable yield recognized at the pool level and not to contractual interest payments i at the loan level.
(b) Smithtown charge-offs include $14.5MM, $8.2M and $17.7M incurred upon sale of acquired loans in 3Q11, 2Q11, and 1Q11, 6 respectively.
Loans
Linked Quarter Change (in $ millions)
333 1,806
545
(223)
20,148
7 |
|
17,687
Jun 30, 2011 Commercial Retail Acquired ex Acquired- Sep 30, 2011
Banking Danvers Danvers
Annualized Linked 20.7% 28.0% (37.4%)
Quarter Change:
Originated Annualized
Linked Quarter Change: 23.0%
Total annualized excluding Acquired-Danvers: 14.8%
Deposits
Linked Quarter Change (in $ millions)
1,940 (24)
20,487
18,278
Jun 30, 2011 Legacy De Novo1 Acquired ex Acquired- Sep30,2011
Danvers Danvers
Annualized Linked 5.7% 56.7% (4.0%)
Quarter Change:
8 |
|
Total annualized excluding Acquired-Danvers 5.9% 1 Represents emerging markets: Westchester County and Boston MSA
Growing Future Earnings Per Share
Loans and Deposits per Share
Loans
Deposits
$60.0
$58.77
$21.0
$20.0 -$19.0 -$18.0 -$17.0 -$16.0 -$15.0—| $14.0 -|J
$20.0 -$19.0 -$18.0 -$17.0 -$16.0 -$15.0 -$14.0 —
$55.0
$50.0
- $45.0— $40.0
2009Q3 2010Q1 2010Q3** 2011Q1*** 2011Q3
$Bn
0$60.0 $21.0
$55.0
$50.0
- $45.0— $40.0
$57.80
Q.
(1) |
|
Share
Q
2009Q3 2010Q1 2010Q3** 2011Q1*** 2011Q3
Share
W
per.
(/) O Q. (1)
Q
Gross Loans ($Bn) Loans per share
Deposits ($Bn) Deposits per share
9
Pro forma for FIF acquisition
*Pro forma for SMTB & LSBX acquisitions ** *Pro forma for DNBK acquisition
Non-Interest Income
(in $ millions)
2 |
| 4 1.3 |
4.7
8.6
(12.0)
10
2Q2011 Acquired Security Loan Danvers Insurance Bank 3Q2011
Loan Sales Gains Prepayment Service
Fees Charges
Non-Interest Expense
(in $ millions)
Total operating ex Danvers up $0.2MM
Non-operating increase from 2Q
Non-Operating Operating
12.4 1.6 231.9
(0.2) (1.2)
9.3 3.0 21.5
207.0
210.4
197.8
11
2Q2011 FHLB Other Merger/ Danvers Occupancy & Comp & Other 3Q2011
Prepayment non-operating Operating Equipment Benefits
Penalties
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Efficiency Ratio
Last Five Quarters
71.2% 71.1%
66.2% 65.7%
63.1%
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Asset Quality
NPAs / Loans & REO* (%)
4.00 3.00 2.00 1.00
Last Five Quarters
3.26
2.75
1.88
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
PBCT Peer Group Median Top 50 Banks by Assets
Non-performing assets (excluding acquired non-performing loans) as a percentage of originated loans plus all REO and repossessed assets; acquired non-performing loans excluded as risk of loss has been considered by virtue of our estimate of acquisition-date fair value and/or the existence of an FDIC loss sharing agreement
Source: SNL Financial and Company filings 13
Asset Quality
Net Charge-Offs / Avg. Loans (%)
2.00 1.50 1.00 0.50 0.00
Last Five Quarters
1.09 0.92
0.27
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
PBCT —— Peer Group Median Top 50 Banks
Source: SNL Financial and Company filings 14
1.58%
0.26%
NPLs:Loans ALLL:Loans
Retail ALLL-$13.0 million 16% of Retail NPLs
Total
Allowance for Loan Losses
Originated Portfolio Coverage Detail (in $ millions)
2.00% 1.50% 1.00% 0.50% 0.00%
2.00% 1.50% 1.00% 0.50% 0.00%
1.6% 1.48%
? Commercial Banking
NPLs:Loans ALLL:Loans
2.00%
1.50%
1.00%
0.50%
0.00%
Commercial ALLL—$164.0 million 92% of Commercial NPLs
1.60%
1.09%
NPLs:Loans ALLL:Loans
Retail Banking
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Total ALLL-$177.0 million 69% of Total NPLs
Operating ROAA Progress
Last Five Quarters
0.87%
0.92%
0.98%
16
0.64%
0.50%
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Operating ROATE Progress
Last Five Quarters
8.0%
6.7%
7.1%
17
4.2%
3.1%
3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Operating Dividend Payout Ratio
Last Five Quarters
200.4%
150.4%
1 |
|
100.7%
95.1%
85.3%
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3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Capital Ratios
3Q2010
4Q2010
13Q2011
3Q2011
3Q2011
People’s United Financial
Tang. Com. Equity/Tang. Assets 17.8% 14.1% 13.9% 13.9% 12.5%
Leverage Ratio1,5 18.0% 14.5% 14.6% 14.3% 12.7%
Tier1 Common2 22.3% 17.0% 17.2% 17.0% 15.0%
Tier 1 Risk-Based Capital 3,5 22.7% 17.5% 17.7% 17.6% 15.2%
Total Risk-Based Capital4,5 23.6% 19.3% 19.4% 19.1% 16.6%
Leverage Ratio 15 13.0% 11.4% 11.5% 11.6% 11.8%
Tier1 Risk-Based Capital3,5 15.4% 13.6% 13.9% 14.2% 14.1%
Total Risk-Based Capital4,5 16.4% 14.5% 14.8% 15.0% 14.9%
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Notes:
1. Leverage (core) Capital represents Tier 1 Capital (total stockholder’s equity, excluding: (i) after-tax net unrealized gains (losses) on certain securities classified as available for sale; (ii) goodwill and other acquisition-related intangibles; and (iii) the amount recorded in accumulated other comprehensive income (loss) relating to pension and other postretirement benefits), divided by Adjusted Total Assets (period end total assets less goodwill and other acquisition-related intangibles)
2. Tier 1 Common represents total stockholder’s equity, excluding goodwill and other acquisition-related intangibles, divided by Total Risk-Weighted Assets
3. Tier 1 Risk-Based Capital represents Tier 1 Capital divided by Total Risk-Weighted Assets
4. Total Risk-Based Capital represents Tier 1 Capital plus subordinated notes and debentures, up to certain limits, and the allowance for loan losses, up to 1.25% of total risk weighted assets, divided by Total Risk-Weighted Assets
5. Well capitalized limits for the Bank are: Leverage Ratio, 5%; Tier 1 Risk-Based Capital, 6%; and Total Risk Based Capital, 10%.
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Summary
> Premium brand built over 169 years
> High quality Northeast footprint characterized by wealth, density and commercial activity
Strengthened leadership team
Low cost of deposits
Strong net interest margin
Superior asset quality
Focus on relationship-based banking
> Growing loans and deposits within footprint—in two of the largest MSAs in the country (New York City, #1 and Boston, #10)
Moving to a 55% efficiency ratio
Returning capital to shareholders
Tangible Common Equity ratio of 12.5%, Tier 1 Common of 15.0%
Appendix
22
Current Asset Sensitivity
We do not expect short-term interest rates to rise any time soon
Given short-term interest rates are very low and are expected to remain low for the near term, we continue to hold securities
For 2Q 2011 we were 2.8x—3.5x as asset sensitive as the estimated median of our new peer group, depending on the scenario
For an immediate parallel increase of 100bps, our net interest income is projected to increase by ~$50MM on an annualized basis
Yield curve twist scenarios confirm that we are reasonably well protected from bull flattener (short rates are unchanged, long rates fall) and benefit considerably from bear flattener environments (short rates rise, long rates are unchanged)
Net Interest Income at Risk1
Analysis involves PBCT estimates, see notes below
Change in Net Interest Income
Lowest Highest PBCT Multiple to
Scenario Amongst Peers Amongst Peers Peer Median Peer Median
Shock Up -5.1% 5.8% 1.7% 2.8x
100bps 2
Shock Up -9.0% 13.0% 3.1% 3.5x
200bps 3
Notes:
Analysis is as of 6/30/11 filings
Data as of 6/30/11 SEC filings, where exact+100bps shock up scenario data was not provided PBCT interpolated based on data disclosed
Data as of 6/30/11 filings, where exact +200bps shock up scenario data was not provided PBCT interpolated based on data disclosed
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New Peer Group
Firm Ticker City State
Associated ASBC Green Bay WI
BancorpSouth BXS Tupelo MS
City National CYN Los Angeles CA
Comerica CMA Dallas TX
Commerce CBSH Kansas City MO
Cullen/Frost CFR San Antonio TX
East West EWBC Pasadena CA
First Niagara FNFG Buffalo NY
FirstMerit FMER Akron OH
Fulton FULT Lancaster PA
Huntington HBAN Columbus OH
M&T MTB Buffalo NY
New York Community NYB Westbury NY
Signature SBNY New York NY
Susquehanna SUSQ Lititz PA
Synovus SNV Columbus GA
Valley National VLY Wayne NJ
Webster WBS Waterbury CT
Wintrust WTFC Lake Forest IL
Zions ZION Salt Lake City UT
For more information, investors may contact:
Peter Goulding, CFA
203-338-6799 peter.goulding@peoples.com