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Peoples United Financial Inc.$18.17$.06.33%

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 People’s United Financial Reports Fourth Quarter Net Income of $75.9 Million, or $0.24 Per Common Share
   Thursday, January 19, 2017 4:01:00 PM ET

People’s United Financial, Inc. (PBCT ) today reported net income of $75.9 million, or $0.24 per common share, for the fourth quarter of 2016, compared to $70.8 million, or $0.23 per common share, for the fourth quarter of 2015, and $73.7 million, or $0.24 per common share, for the third quarter of 2016.

Included in this quarter’s results were merger-related and acquisition integration costs of $1.6 million ($1.0 million after-tax), or less than $0.01 per common share, compared to $3.1 million ($2.1 million after-tax), or $0.01 per common share, for the third quarter of 2016. Fourth quarter 2015 results included a gain of $9.2 million ($6.1 million after-tax), or $0.02 per common share, resulting from the sale of the Company’s payroll services business.

For the year ended December 31, 2016, net income totaled $281.0 million, or $0.92 per common share, compared to $260.1 million, or $0.86 per common share, for 2015.

The Company’s Board of Directors declared a $0.17 per share quarterly dividend, payable February 15, 2017 to shareholders of record on February 1, 2017. Based on the closing stock price on January 18, 2017, the dividend yield on People’s United Financial common stock is 3.5 percent.

"We are pleased with the Company’s financial and operating performance this year," commented Jack Barnes, President and Chief Executive Officer. "Full year net income of $281 million is the highest in the Company’s history and return on average tangible common equity was 10.2 percent. Our straightforward, solutions-oriented approach to banking enabled us to further expand client relationships and forge new ones as demonstrated by another year of growth in loans, deposits and wealth management assets. We continued to improve operating leverage during the year through revenue growth as well as proactive expense management which has limited the increase in expenses to an average annual rate of less than one percent over the last five years."

Barnes continued, "We strengthened fee income generating capabilities over the course of the year through infrastructure investments and acquisitions, most notably the addition of Gerstein Fisher which closed in early November. We also continued to strategically add talent across the organization to further drive revenue growth. Earlier in the year, we announced the acquisition of Suffolk Bancorp which upon closing will deepen our presence in the New York metro area."

Barnes concluded, "We continually strive to balance and utilize six levers to create shareholder value: enhancing client-focused capabilities, growing the balance sheet, maintaining excellent asset quality, diversifying revenues, controlling costs and deploying capital efficiently. As such, we enter 2017 well-positioned across our diverse portfolio of businesses and attractive Northeast footprint to further deliver exceptional service to clients and profitable growth to shareholders."

"Our fourth quarter performance provided a strong finish to the year as evidenced by record quarterly net income of $75.9 million and a return on average tangible common equity of 10.7 percent," stated David Rosato, Senior Executive Vice President and Chief Financial Officer. "Net income increased seven percent from the prior year quarter due to higher net interest income and continued expense control. As a result, the efficiency ratio was 59.3 percent, an improvement of 170 basis points from a year ago."

Rosato concluded, "Loans grew five percent on an annualized basis, marking the 25th consecutive quarter of growth. The increase was driven by strong results in commercial real estate and residential mortgage, partially offset by lower mortgage warehouse lending balances. We maintained excellent asset quality across each portfolio, reflected by net charge-offs as a percentage of average loans of only six basis points for the quarter. Deposit growth was three percent annualized, while the overall cost of deposits remained consistent with the third quarter. Furthermore, we issued $250 million of preferred stock which enhanced our already strong capital position."

At December 31, 2016, People’s United Financial’s common equity tier 1 capital and total risk-based capital ratios were 9.9 percent and 12.5 percent, respectively, and the tangible common equity ratio stood at 7.2 percent. For People’s United Bank, N.A., common equity tier 1 capital and total risk-based capital ratios were 11.3 percent and 13.4 percent, respectively, at December 31, 2016.

Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.06 percent in the fourth quarter of 2016, a slight increase from 0.04 percent in the third quarter of 2016, but lower than 0.09 percent in the fourth quarter of 2015. For the originated loan portfolio, non-performing loans equaled 0.51 percent of loans at December 31, 2016, a decrease from 0.54 percent at September 30, 2016 and 0.58 percent at December 31, 2015.

Return on average assets of 0.75 percent for the fourth quarter of 2016 was an increase from 0.73 percent in the third quarter of 2016 and unchanged from the fourth quarter of 2015. Return on average tangible common equity of 10.7 percent in the fourth quarter of 2016 was unchanged from both the third quarter of 2016 and fourth quarter of 2015.

People’s United Financial, Inc., a diversified financial services company with $41 billion in total assets, provides commercial and retail banking, as well as wealth management services through a network of approximately 400 branches in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine. Through its subsidiaries, People’s United Financial provides equipment financing, brokerage and insurance services.

4Q 2016 Financial Highlights

Summary

-- Net income totaled $75.9 million, or $0.24 per common share.

-- Net income available to common shareholders totaled $74.1 million.

-- Operating earnings totaled $75.1 million, or $0.24 per common share (see Non-GAAP Financial Measures and Reconciliation to GAAP).

-- Net interest income totaled $246.8 million in 4Q16 compared to $245.3 million in 3Q16.

-- Net interest margin decreased two basis points from 3Q16 to 2.78% reflecting:

-- Higher yield on the securities portfolio (increase of two basis points).

-- New loan volume at rates lower than the existing portfolio (decrease of three basis points).

-- Higher rate on borrowings (decrease of one basis point).

-- Provision for loan losses totaled $7.7 million.

-- Net loan charge-offs totaled $4.7 million.

-- Net loan charge-off ratio of 0.06% in 4Q16.

-- Non-interest income was $84.2 million in 4Q16 compared to $90.8 million in 3Q16.

-- Investment management fees increased $2.6 million, primarily reflecting the benefit from the addition of Gerstein Fisher in early November.

-- Net gains on sales of residential mortgages increased $0.7 million.

-- Recorded a $6.3 million gain in 4Q16 (included in other non-interest income) from the sale of an ownership interest in a legacy privately-held investment.

-- Insurance revenue decreased $3.0 million, reflecting the seasonal nature of commercial insurance renewals.

-- Operating lease income decreased $1.7 million.

-- Bank service charges decreased $1.1 million.

-- Net security losses in 4Q16 totaled $6.0 million.

-- At December 31, 2016, assets under administration, which are not reported as assets of People’s United Financial, totaled $21.3 billion, of which $8.0 billion are under discretionary management, compared to $18.2 billion and $5.7 billion, respectively, at September 30, 2016.

-- Non-interest expense totaled $217.2 million in 4Q16 compared to $221.4 million in 3Q16.

-- Operating non-interest expense totaled $215.6 million in 4Q16 (see Non-GAAP Financial Measures and Reconciliation to GAAP).

-- Compensation and benefits expense, excluding $0.7 million of acquisition integration costs in 4Q16, decreased $2.8 million, primarily reflecting lower payroll and benefit-related costs in 4Q16.

-- Professional and outside services expense, excluding $0.9 million and $3.1 million of merger-related expenses in 4Q16 and 3Q16, respectively, increased $0.8 million.

-- Regulatory assessments expense increased $0.5 million.

-- The efficiency ratio was 59.3% in 4Q16 compared to 59.9% in 3Q16 (see Non-GAAP Financial Measures and Reconciliation to GAAP).

-- The effective income tax rate was 28.5% for 4Q16 and 31.4% for the full-year of 2016, compared to 33.4% for the full-year of 2015 (32.8% for 4Q15).

-- The lower full-year rate reflects an increase in tax advantaged investments as well as the effects of certain tax planning strategies.

Commercial Banking

-- Commercial loans totaled $21.4 billion at December 31, 2016, an increase of $214 million, or 4% annualized, from September 30, 2016.

-- The mortgage warehouse portfolio decreased $107 million from September 30, 2016.

-- Average commercial loans totaled $21.1 billion in 4Q16, a $57 million increase from 3Q16.

-- The average mortgage warehouse portfolio decreased $18 million in 4Q16.

-- Commercial deposits totaled $10.4 billion at December 31, 2016 compared to $10.3 billion at September 30, 2016.

-- The ratio of originated non-performing commercial loans to originated commercial loans was 0.49% at December 31, 2016 compared to 0.53% at September 30, 2016.

-- Non-performing commercial assets, excluding acquired non-performing loans, totaled $114.4 million at December 31, 2016 compared to $127.4 million at September 30, 2016.

-- For the originated commercial portfolio, the allowance for loan losses as a percentage of loans was 0.95% at December 31, 2016 compared to 0.94% at September 30, 2016.

-- The commercial originated allowance for loan losses represented 193% of originated non-performing commercial loans at December 31, 2016 compared to 178% at September 30, 2016.

Retail Banking

-- Residential mortgage loans totaled $6.2 billion at December 31, 2016, an increase of $189 million, or 13% annualized, from September 30, 2016.

-- Average residential mortgage loans totaled $6.1 billion in 4Q16, an increase of $201 million, or 14% annualized, from 3Q16.

-- Home equity loans totaled $2.1 billion at December 31, 2016, a $27 million decrease from September 30, 2016.

-- Average home equity loans totaled $2.1 billion in 4Q16, a $21 million decrease from 3Q16.

-- Retail deposits totaled $19.5 billion at December 31, 2016 compared to $19.4 billion at September 30, 2016.

-- The ratio of originated non-performing residential mortgage loans to originated residential mortgage loans was 0.45% at December 31, 2016 compared to 0.48% at September 30, 2016.

-- The ratio of originated non-performing home equity loans to originated home equity loans was 0.85% at December 31, 2016 compared to 0.80% at September 30, 2016.

Conference Call On January 19, 2017, 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, 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; and (10) 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)                                 2016              2016         2016         2016         2015
Earnings Data:
Net interest income (fully taxable equivalent)    $                          255.2           $ 254.2      $ 247.7      $ 247.4      $ 245.3
Net interest income                                                          246.8             245.3        240.0        240.1        238.8
Provision for loan losses                                                    7.7               8.4          10.0         10.5         9.7
Non-interest income (1)                                                      84.2              90.8         85.4         82.3         93.3
Non-interest expense (2)                                                     217.2             221.4        212.9        217.3        217.0
Income before income tax expense                                             106.1             106.3        102.5        94.6         105.4
Net income                                                                   75.9              73.7         68.5         62.9         70.8
Net income available to common shareholders (2)                              74.1              73.7         68.5         62.9         70.8
Selected Statistical Data:
Net interest margin (3)                                                      2.78            % 2.80       % 2.79       % 2.83       % 2.87       %
Return on average assets (2), (3)                                            0.75              0.73         0.70         0.65         0.75
Return on average common equity (3)                                          6.1               6.1          5.7          5.3          6.0
Return on average tangible common equity (2), (3)                            10.7              10.7         10.1         9.4          10.7
Efficiency ratio (2)                                                         59.3              59.9         60.4         62.7         61.0
Common Share Data:
Basic and diluted earnings per common share (2)   $                          0.24            $ 0.24       $ 0.23       $ 0.21       $ 0.23
Dividends paid per share                                                     0.17              0.17         0.17         0.1675       0.1675
Dividend payout ratio (2)                                                    69.8            % 70.1       % 75.4       % 80.6       % 71.5       %
Book value per share (end of period)              $                          15.85           $ 15.99      $ 15.91      $ 15.80      $ 15.62
Tangible book value per share (end of period) (2)                            8.92              9.18         9.07         8.94         8.73
Stock price:
High                                                                         20.13             16.40        16.68        16.27        16.93
Low                                                                          15.28             14.22        13.80        13.62        15.00
Close (end of period)                                                        19.36             15.82        14.66        15.93        16.15
Common shares (end of period) (in millions)                                  308.97            304.02       303.55       303.27       302.86
Weighted average diluted common shares (in millions)                         306.23            303.24       302.48       301.86       301.38
(1) Three months ended December 31, 2015 includes a $9.2 million net gain resulting from the sale of People’s United
Bank’s payroll services business.
(2) See Non-GAAP Financial Measures and Reconciliation to GAAP.
(3) Annualized.
People’s United Financial, Inc.
FINANCIAL HIGHLIGHTS
                                                     Twelve Months Ended
                                                     December 31,
(dollars in millions, except per share data)                                2016                     2015
Earnings Data:
Net interest income (fully taxable equivalent)       $                      1,004.5                $ 957.3
Net interest income                                                         972.2                    932.1
Provision for loan losses                                                   36.6                     33.4
Non-interest income (1)                                                     342.7                    352.4
Non-interest expense (2)                                                    868.8                    860.6
Income before income tax expense                                            409.5                    390.5
Net income                                                                  281.0                    260.1
Net income available to common shareholders (2)                             279.2                    260.1
Selected Statistical Data:
Net interest margin                                                         2.80                   % 2.88           %
Return on average assets (2)                                                0.71                     0.71
Return on average common equity                                             5.8                      5.5
Return on average tangible common equity (2)                                10.2                     10.0
Efficiency ratio (2)                                                        60.5                     61.5
Common Share Data:
Basic and diluted earnings per common share (2)      $                      0.92                   $ 0.86
Dividends paid per share                                                    0.6775                   0.6675
Dividend payout ratio (2)                                                   73.7                   % 77.3           %
Book value per share (end of period)                 $                      15.85                  $ 15.62
Tangible book value per share (end of period) (2)                           8.92                     8.73
Stock price:
High                                                                        20.13                    16.95
Low                                                                         13.62                    13.97
Close (end of period)                                                       19.36                    16.15
Common shares (end of period) (in millions)                                 308.97                   302.86
Weighted average diluted common shares (in millions)                        303.99                   300.41
(1) Twelve months ended December 31, 2015 includes a $9.2 million net gain resulting
from the sale of People’s United Bank’s payroll services business.
(2) See Non-GAAP Financial Measures and Reconciliation to GAAP.
People’s United Financial, Inc.
FINANCIAL HIGHLIGHTS
                                                                                   As of and for the Three Months Ended
                                                           Dec. 31,                Sept. 30,   June 30,   March 31,       Dec. 31,
(dollars in millions)                                      2016                    2016        2016       2016            2015
Financial Condition Data:
Total assets                                             $ 40,610                $ 40,692    $ 40,150   $ 39,264        $ 38,947
Loans                                                      29,745                  29,368      29,038     28,511          28,411
Securities                                                 6,738                   7,046       6,785      6,732           6,449
Short-term investments                                     182                     373         364        251             380
Allowance for loan losses                                  229                     226         220        216             211
Goodwill and other acquisition-related intangible assets   2,142                   2,070       2,076      2,079           2,088
Deposits                                                   29,861                  29,656      28,999     29,105          28,417
Borrowings                                                 4,057                   4,437       4,563      3,717           4,307
Notes and debentures                                       1,030                   1,054       1,058      1,050           1,033
Stockholders’ equity                                       5,142                   4,862       4,830      4,791           4,732
Total risk-weighted assets (1):
People’s United Financial, Inc.                            30,508                  30,451      30,267     29,832          29,646
People’s United Bank, N.A.                                 30,440                  30,415      30,232     29,826          29,621
Non-performing assets (2)                                  167                     180         182        189             182
Net loan charge-offs                                       4.7                     2.5         5.1        6.0             6.2
Average Balances:
Loans                                                    $ 29,346                $ 29,107    $ 28,558   $ 28,159        $ 27,853
Securities (3)                                             7,074                   6,873       6,699      6,498           6,133
Short-term investments                                     308                     361         298        348             247
Total earning assets                                       36,728                  36,341      35,555     35,005          34,233
Total assets                                               40,623                  40,304      39,422     38,773          37,955
Deposits                                                   29,773                  29,437      29,079     28,721          28,481
Borrowings                                                 4,148                   4,296       3,895      3,664           3,187
Notes and debentures                                       1,045                   1,056       1,049      1,044           1,037
Total funding liabilities                                  34,966                  34,789      34,023     33,429          32,705
Stockholders’ equity                                       5,039                   4,841       4,795      4,761           4,736
Ratios:
Net loan charge-offs to average total loans (annualized)   0.06                  % 0.04      % 0.07     % 0.09          % 0.09     %
Non-performing assets to originated loans,
real estate owned and repossessed assets (2)               0.57                    0.63        0.64       0.68            0.66
Originated allowance for loan losses to:
Originated loans (2)                                       0.77                    0.76        0.75       0.75            0.73
Originated non-performing loans (2)                        150.6                   142.0       135.3      123.3           127.3
Average stockholders’ equity to average total assets       12.4                    12.0        12.2       12.3            12.5
Stockholders’ equity to total assets                       12.7                    11.9        12.0       12.2            12.2
Tangible common equity to tangible assets (4)              7.2                     7.2         7.2        7.3             7.2
Total risk-based capital (1):
People’s United Financial, Inc.                            12.5                    11.5        11.5       11.5            11.7
People’s United Bank, N.A.                                 13.4                    12.8        12.8       12.9            12.6
(1) December 31, 2016 amounts and ratios are preliminary.
(2) Excludes acquired loans.
(3) Average balances for securities are based on amortized cost.
(4) See Non-GAAP Financial Measures and Reconciliation to GAAP.
People’s United Financial, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
                                                                   Dec. 31,                Sept. 30,               June 30,                Dec. 31,
(in millions)                                                      2016                    2016                    2016                    2015
Assets
Cash and due from banks                                            $     432.4             $     347.5             $     343.9             $     334.8
Short-term investments                                             181.7                   372.8                   363.9                   380.5
Total cash and cash equivalents                                    614.1                   720.3                   707.8                   715.3
Securities:
Trading account securities, at fair value                          6.8                     6.8                     6.8                     6.7
Securities available for sale, at fair value                       4,409.9                 4,906.5                 4,711.8                 4,527.7
Securities held to maturity, at amortized cost                     2,005.4                 1,817.5                 1,749.4                 1,609.6
Federal Home Loan Bank and Federal Reserve Bank stock, at cost     315.8                   315.5                   317.4                   305.4
Total securities                                                   6,737.9                 7,046.3                 6,785.4                 6,449.4
Loans held for sale                                                39.3                    46.5                    61.4                    34.5
Loans:
Commercial real estate                                             10,247.3                10,001.7                10,011.3                10,028.8
Commercial and industrial                                          8,125.1                 8,201.2                 8,066.1                 7,748.7
Equipment financing (1)                                            3,032.5                 2,987.6                 3,005.9                 2,973.3
Total Commercial Portfolio                                         21,404.9                21,190.5                21,083.3                20,750.8
Residential mortgage                                               6,216.7                 6,028.0                 5,789.0                 5,457.0
Home equity and other consumer                                     2,123.3                 2,149.3                 2,166.0                 2,203.1
Total Retail Portfolio                                             8,340.0                 8,177.3                 7,955.0                 7,660.1
Total loans                                                        29,744.9                29,367.8                29,038.3                28,410.9
Less allowance for loan losses                                     (229.3)                 (226.3)                 (220.4)                 (211.0)
Total loans, net                                                   29,515.6                29,141.5                28,817.9                28,199.9
Goodwill and other acquisition-related intangible assets           2,142.0                 2,070.3                 2,076.1                 2,087.8
Bank-owned life insurance                                          349.1                   347.8                   346.8                   346.5
Premises and equipment                                             244.5                   245.1                   249.5                   257.8
Other assets                                                       967.3                   1,074.3                 1,105.1                 855.5
Total assets                                                       $ 40,609.8              $ 40,692.1              $ 40,150.0              $ 38,946.7
Liabilities
Deposits:
Non-interest-bearing                                               $   6,660.8             $   6,521.8             $   6,226.8             $   6,178.6
Savings                                                            4,397.7                 4,391.4                 4,474.2                 4,199.9
Interest-bearing checking and money market                         14,260.1                14,055.5                13,566.0                13,220.8
Time                                                               4,542.2                 4,686.8                 4,732.1                 4,818.1
Total deposits                                                     29,860.8                29,655.5                28,999.1                28,417.4
Borrowings:
Federal Home Loan Bank advances                                    3,061.1                 3,261.8                 3,562.4                 3,463.8
Federal funds purchased and other borrowings                       652.4                   844.0                   680.0                   374.0
Customer repurchase agreements                                     343.3                   330.7                   320.8                   469.5
Total borrowings                                                   4,056.8                 4,436.5                 4,563.2                 4,307.3
Notes and debentures                                               1,030.1                 1,053.9                 1,058.2                 1,033.1
Other liabilities                                                  520.2                   683.9                   699.8                   457.3
Total liabilities                                                  35,467.9                35,829.8                35,320.3                34,215.1
Stockholders’ Equity
Preferred stock                                                    244.1                   -                       -                       -
Common stock                                                       4.0                     4.0                     3.9                     3.9
Additional paid-in capital                                         5,446.1                 5,359.8                 5,350.4                 5,337.7
Retained earnings                                                  949.3                   927.3                   905.8                   880.8
Accumulated other comprehensive loss                               (195.0)                 (120.4)                 (120.3)                 (177.2)
Unallocated common stock of Employee Stock Ownership Plan, at cost (144.6)                 (146.4)                 (148.1)                 (151.8)
Treasury stock, at cost                                            (1,162.0)               (1,162.0)               (1,162.0)               (1,161.8)
Total stockholders’ equity                                         5,141.9                 4,862.3                 4,829.7                 4,731.6
Total liabilities and stockholders’ equity                         $ 40,609.8              $ 40,692.1              $ 40,150.0              $ 38,946.7
(1) Represents loans and leases held by People’s Capital and Leasing Corp. and People’s United Equipment Finance Corp.
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)                        2016          2016          2016          2016          2015
Interest and dividend income:
Commercial real estate                                      $   86.8      $   85.7      $   85.3      $   86.8      $   86.1
Commercial and industrial                                   65.0          66.9          62.8          60.3          59.6
Equipment financing (1)                                     31.8          32.8          33.0          33.3          33.1
Residential mortgage                                        47.0          45.7          43.8          43.9          43.0
Consumer                                                    18.1          18.4          18.4          18.6          18.1
Total interest on loans                                     248.7         249.5         243.3         242.9         239.9
Securities                                                  36.9          34.2          34.7          34.5          33.8
Loans held for sale                                         0.3           0.4           0.2           0.2           0.3
Short-term investments                                      0.4           0.4           0.3           0.4           0.2
Total interest and dividend income                          286.3         284.5         278.5         278.0         274.2
Interest expense:
Deposits                                                    25.1          25.2          25.4          25.2          24.6
Borrowings                                                  6.4           6.1           5.3           5.0           3.3
Notes and debentures                                        8.0           7.9           7.8           7.7           7.5
Total interest expense                                      39.5          39.2          38.5          37.9          35.4
Net interest income                                         246.8         245.3         240.0         240.1         238.8
Provision for loan losses                                   7.7           8.4           10.0          10.5          9.7
Net interest income after provision for loan losses         239.1         236.9         230.0         229.6         229.1
Non-interest income:
Bank service charges                                        24.2          25.3          24.7          23.8          25.0
Investment management fees                                  14.2          11.6          11.4          11.1          10.8
Operating lease income                                      9.5           11.2          10.1          10.4          10.5
Commercial banking lending fees                             7.2           7.1           9.2           8.1           9.2
Insurance revenue                                           6.8           9.8           7.0           9.3           7.5
Cash management fees                                        6.2           6.5           6.3           6.0           6.1
Customer interest rate swap income, net                     3.8           3.7           3.6           3.3           3.6
Brokerage commissions                                       2.8           3.2           3.2           3.0           3.1
Net gains on sales of residential mortgage loans            2.6           1.9           0.9           0.9           1.3
Bank-owned life insurance                                   1.5           1.2           2.0           1.0           1.0
Net security (losses) gains                                 (6.0)         -             -             0.1           -
Gain on sale of business, net of expenses                   -             -             -             -             9.2
Other non-interest income                                   11.4          9.3           7.0           5.3           6.0
Total non-interest income (2)                               84.2          90.8          85.4          82.3          93.3
Non-interest expense:
Compensation and benefits                                   114.0         116.1         111.4         114.1         112.0
Occupancy and equipment                                     37.8          37.7          37.4          37.5          37.0
Professional and outside services                           16.3          17.7          16.4          17.4          17.9
Regulatory assessments                                      10.4          9.9           9.2           8.0           7.1
Operating lease expense                                     8.3           9.7           9.1           9.2           9.4
Amortization of other acquisition-related intangible assets 6.2           5.8           5.8           5.8           6.1
Other non-interest expense                                  24.2          24.5          23.6          25.3          27.5
Total non-interest expense (2)                              217.2         221.4         212.9         217.3         217.0
Income before income tax expense                            106.1         106.3         102.5         94.6          105.4
Income tax expense                                          30.2          32.6          34.0          31.7          34.6
Net income                                                  75.9          73.7          68.5          62.9          70.8
Preferred stock dividend                                    1.8           -             -             -             -
Net income available to common shareholders                 $   74.1      $   73.7      $   68.5      $   62.9      $   70.8
Basic and diluted earnings per common share                 $   0.24      $   0.24      $   0.23      $   0.21      $   0.23
(1) Represents loans and leases held by People’s Capital and Leasing Corp. and People’s United Equipment Finance Corp.
(2) Total non-interest income includes $9.2 million of non-operating income for the three months ended December 31, 2015.
Total non-interest expense includes $1.6 million, $3.1 million and $3.8 million of non-operating expenses for the three
months ended December 31, 2016, September 30, 2016 and December 31, 2015, 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)                        2016                      2015
Interest and dividend income:
Commercial real estate                                      $  344.6                  $  343.5
Commercial and industrial                                   255.0                     234.8
Equipment financing (1)                                     130.9                     129.6
Residential mortgage                                        180.4                     165.4
Consumer                                                    73.5                      72.3
Total interest on loans                                     984.4                     945.6
Securities                                                  140.3                     121.5
Loans held for sale                                         1.1                       1.3
Short-term investments                                      1.5                       0.5
Total interest and dividend income                          1,127.3                   1,068.9
Interest expense:
Deposits                                                    100.9                     95.5
Borrowings                                                  22.8                      11.5
Notes and debentures                                        31.4                      29.8
Total interest expense                                      155.1                     136.8
Net interest income                                         972.2                     932.1
Provision for loan losses                                   36.6                      33.4
Net interest income after provision for loan losses         935.6                     898.7
Non-interest income:
Bank service charges                                        98.0                      100.7
Investment management fees                                  48.3                      43.7
Operating lease income                                      41.2                      42.3
Insurance revenue                                           32.9                      30.7
Commercial banking lending fees                             31.6                      42.6
Cash management fees                                        25.0                      24.5
Customer interest rate swap income, net                     14.4                      14.5
Brokerage commissions                                       12.2                      12.6
Net gains on sales of residential mortgage loans            6.3                       5.5
Bank-owned life insurance                                   5.7                       4.6
Net security losses                                         (5.9)                     -
Gain on sale of business, net of expenses                   -                         9.2
Net gains on sales of acquired loans                        -                         1.7
Other non-interest income                                   33.0                      19.8
Total non-interest income (2)                               342.7                     352.4
Non-interest expense:
Compensation and benefits                                   455.6                     449.5
Occupancy and equipment                                     150.4                     149.5
Professional and outside services                           67.8                      68.0
Regulatory assessments                                      37.5                      35.1
Operating lease expense                                     36.3                      37.1
Amortization of other acquisition-related intangible assets 23.6                      23.9
Other non-interest expense                                  97.6                      97.5
Total non-interest expense (2)                              868.8                     860.6
Income before income tax expense                            409.5                     390.5
Income tax expense                                          128.5                     130.4
Net income                                                  281.0                     260.1
Preferred stock dividend                                    1.8                       -
Net income available to common shareholders                 $  279.2                  $  260.1
Basic and diluted earnings per common share                 $    0.92                 $    0.86
(1) Represents loans and leases held by People’s Capital and Leasing Corp. and People’s United
Equipment Finance Corp.
(2) Total non-interest income includes $9.2 million of non-operating income for the twelve months
ended December 31, 2015. Total non-interest expense includes $4.7 million and $12.9 million of
non-operating expenses for the twelve months ended December 31, 2016 and 2015, 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, 2016                                    September 30, 2016                    December 31, 2015
Three months ended                    Average                               Yield/         Average                  Yield/       Average                 Yield/
(dollars in millions)                 Balance            Interest           Rate           Balance      Interest    Rate         Balance     Interest    Rate
Assets:
Short-term investments                $     307.9        $    0.4           0.44%          $     361.0  $    0.4    0.47%        $     247.1 $    0.2    0.21%
Securities (2)                        7,073.5            42.1               2.38           6,872.5      38.9        2.26         6,133.1     37.7        2.46
Loans:
Commercial real estate                10,079.4           86.8               3.44           9,978.8      85.7        3.44         9,911.1     86.1        3.48
Commercial and industrial             8,023.3            68.2               3.40           8,053.2      71.1        3.53         7,426.5     62.2        3.35
Equipment financing                   2,971.4            31.8               4.29           2,984.7      32.8        4.39         2,874.3     33.1        4.61
Residential mortgage                  6,136.2            47.3               3.09           5,935.3      46.1        3.11         5,440.6     43.3        3.17
Home equity and other consumer        2,135.9            18.1               3.39           2,155.4      18.4        3.41         2,200.7     18.1        3.31
Total loans                           29,346.2           252.2              3.44           29,107.4     254.1       3.49         27,853.2    242.8       3.49
Total earning assets                  36,727.6           $294.7             3.21%          36,340.9     $293.4      3.23%        34,233.4    $280.7      3.28%
Other assets                          3,895.4                                              3,963.1                               3,721.8
Total assets                          $ 40,623.0                                           $ 40,304.0                            $ 37,955.2
Liabilities and stockholders’ equity:
Deposits:
Non-interest-bearing                  $   6,524.5        $      -           -   %          $   6,325.3  $      -    -   %        $   6,049.3 $      -    -   %
Savings, interest-bearing checking
and money market                      18,614.5           14.1               0.30           18,356.6     13.3        0.29         17,453.7    11.6        0.27
Time                                  4,634.4            11.0               0.95           4,755.1      11.9        1.00         4,977.6     13.0        1.05
Total deposits                        29,773.4           25.1               0.34           29,437.0     25.2        0.34         28,480.6    24.6        0.35
Borrowings:
Federal Home Loan Bank advances       3,028.8            5.1                0.67           3,306.7      5.1         0.62         2,353.8     2.8         0.47
Federal funds purchased and
other borrowings                      790.3              1.1                0.54           674.1        0.9         0.51         398.5       0.3         0.23
Customer repurchase agreements        328.8              0.2                0.20           314.8        0.1         0.19         434.9       0.2         0.20
Total borrowings                      4,147.9            6.4                0.61           4,295.6      6.1         0.57         3,187.2     3.3         0.40
Notes and debentures                  1,045.0            8.0                3.08           1,056.4      7.9         2.97         1,037.6     7.5         2.90
Total funding liabilities             34,966.3           $  39.5            0.45%          34,789.0     $  39.2     0.45%        32,705.4    $  35.4     0.43%
Other liabilities                     617.4                                                674.5                                 513.8
Total liabilities                     35,583.7                                             35,463.5                              33,219.2
Stockholders’ equity                  5,039.3                                              4,840.5                               4,736.0
Total liabilities and
stockholders’ equity                  $ 40,623.0                                           $ 40,304.0                            $ 37,955.2
Net interest income/spread (3)                           $255.2             2.76%                       $254.2      2.78%                    $245.3      2.85%
Net interest margin                                                         2.78%                                   2.80%                                2.87%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities are based on amortized cost.
(3) The fully taxable equivalent adjustment was $8.4 million, $8.9 million and $6.5 million for the three months ended December 31, 2016,
September 30, 2016 and December 31, 2015, respectively.
People’s United Financial, Inc.
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
                                             December 31, 2016                                         December 31, 2015
Twelve months ended                          Average                               Yield/              Average                       Yield/
(dollars in millions)                        Balance            Interest           Rate                Balance        Interest       Rate
Assets:
Short-term investments                       $     328.7        $        1.5       0.45%               $     247.8    $        0.5   0.20%
Securities (1)                               6,786.7            158.8              2.34                5,731.5        135.7          2.37
Loans:
Commercial real estate                       10,013.3           344.6              3.44                9,643.9        343.5          3.56
Commercial and industrial                    7,821.8            268.8              3.44                7,357.8        245.8          3.34
Equipment financing                          2,972.3            130.9              4.40                2,831.7        129.6          4.58
Residential mortgage                         5,824.1            181.5              3.12                5,222.4        166.7          3.19
Home equity and other consumer               2,163.8            73.5               3.40                2,193.1        72.3           3.30
Total loans                                  28,795.3           999.3              3.47                27,248.9       957.9          3.52
Total earning assets                         35,910.7           $  1,159.6         3.23%               33,228.2       $  1,094.1     3.29%
Other assets                                 3,873.6                                                   3,698.7
Total assets                                 $ 39,784.3                                                $ 36,926.9
Liabilities and stockholders’ equity:
Deposits:
Non-interest-bearing                         $   6,236.1        $          -       -   %               $   5,801.9    $          -   -   %
Savings, interest-bearing checking
and money market                             18,258.2           53.0               0.29                16,489.3       43.5           0.26
Time                                         4,760.4            47.9               1.01                5,241.4        52.0           0.99
Total deposits                               29,254.7           100.9              0.34                27,532.6       95.5           0.35
Borrowings:
Federal Home Loan Bank advances              3,093.7            19.2               0.62                2,306.6        9.8            0.42
Federal funds purchased and other borrowings 570.9              2.9                0.50                464.2          0.9            0.19
Customer repurchase agreements               337.2              0.7                0.19                411.0          0.8            0.19
Total borrowings                             4,001.8            22.8               0.57                3,181.8        11.5           0.34
Notes and debentures                         1,048.5            31.4               3.00                1,033.4        29.8           2.88
Total funding liabilities                    34,305.0           $    155.1         0.45%               31,747.8       $    136.8     0.43%
Other liabilities                            619.9                                                     481.8
Total liabilities                            34,924.9                                                  32,229.6
Stockholders’ equity                         4,859.4                                                   4,697.3
Total liabilities and
stockholders’ equity                         $ 39,784.3                                                $ 36,926.9
Net interest income/spread (2)                                  $  1,004.5         2.78%                              $    957.3     2.86%
Net interest margin                                                                2.80%                                             2.88%
(1) Average balances and yields for securities are based on amortized cost.
(2) The fully taxable equivalent adjustment was $32.3 million and $25.2 million for the years ended
December 31, 2016 and 2015, respectively.
People’s United Financial, Inc.
Loans acquired in connection with business combinations are initially recorded at fair value, determined based
upon an 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.
NON-PERFORMING ASSETS
                                                         Dec. 31,      Sept. 30,     June 30,      March 31,     Dec. 31,
(dollars in millions)                                    2016          2016          2016          2016          2015
Originated non-performing loans:
Commercial:
Commercial real estate                                 $ 22.3        $ 23.4        $ 35.4        $ 35.9        $ 30.2
Commercial and industrial                                41.5          40.0          34.7          41.5          44.9
Equipment financing                                      39.4          46.0          40.0          41.1          27.5
Total                                                    103.2         109.4         110.1         118.5         102.6
Retail:
Residential mortgage                                     27.4          28.2          29.9          31.1          37.2
Home equity                                              17.4          16.5          17.4          18.9          19.5
Other consumer                                           -             -             -             -             0.1
Total                                                    44.8          44.7          47.3          50.0          56.8
Total originated non-performing loans (1)                148.0         154.1         157.4         168.5         159.4
REO:
Commercial                                               4.0           11.2          3.3           5.4           5.5
Residential                                              8.1           7.9           9.7           8.2           7.1
Total REO                                                12.1          19.1          13.0          13.6          12.6
Repossessed assets                                       7.2           6.9           11.6          7.3           9.5
Total non-performing assets                            $ 167.3       $ 180.1       $ 182.0       $ 189.4       $ 181.5
Acquired non-performing loans (contractual amount) (2) $ 24.7        $ 24.6        $ 25.5        $ 27.4        $ 30.0
Originated non-performing loans as a percentage
of originated loans                                      0.51        % 0.54        % 0.56        % 0.61        % 0.58       %
Non-performing assets as a percentage of:
Originated loans, REO and repossessed assets             0.57          0.63          0.64          0.68          0.66
Tangible stockholders’ equity and originated
allowance for loan losses                                5.19          5.98          6.14          6.49          6.38
(1) Reported net of government guarantees totaling $13.1 million at December 31, 2016, $13.0 million at September 30, 2016,
$15.8 million at June 30, 2016, $16.2 million at March 31, 2016 and $16.9 million at December 31, 2015.
(2) Represents acquired loans that meet People’s United Financial’s definition of a non-performing loan but are not, under the
accounting model for acquired loans, subject to classification as non-accrual in the same manner as originated loans.
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. 31,      Sept. 30,   June 30,   March 31,   Dec. 31,
(dollars in millions)                                                  2016          2016        2016       2016        2015
Allowance for loan losses on originated loans:
Balance at beginning of period                 $                       219.0       $ 213.0     $ 207.6    $ 202.9     $ 198.1
Charge-offs                                                            (4.7)         (3.8)       (6.1)      (7.4)       (7.8)
Recoveries                                                             1.0           1.4         1.0        1.7         1.6
Net loan charge-offs                                                   (3.7)         (2.4)       (5.1)      (5.7)       (6.2)
Provision for loan losses                                              7.7           8.4         10.5       10.4        11.0
Balance at end of period                                               223.0         219.0       213.0      207.6       202.9
Allowance for loan losses on acquired loans:
Balance at beginning of period                                         7.3           7.4         7.9        8.1         9.4
Charge-offs                                                            (1.0)         (0.1)       -          (0.3)       -
Provision for loan losses                                              -             -           (0.5)      0.1         (1.3)
Balance at end of period                                               6.3           7.3         7.4        7.9         8.1
Total allowance for loan losses                $                       229.3       $ 226.3     $ 220.4    $ 215.5     $ 211.0
Commercial originated allowance for loan loss
as a percentage of originated commercial loans                         0.95        % 0.94      % 0.92     % 0.92      % 0.90     %
Retail originated allowance for loan losses
as a percentage of originated retail loans                             0.30          0.30        0.30       0.30        0.28
Total originated allowance for loan losses
as a percentage of:
Originated loans                                                       0.77          0.76        0.75       0.75        0.73
Originated non-performing loans                                        150.6         142.0       135.3      123.3       127.3
NET LOAN CHARGE-OFFS (RECOVERIES)
                                               Three Months Ended
                                                                       Dec. 31,      Sept. 30,   June 30,   March 31,   Dec. 31,
(dollars in millions)                                                  2016          2016        2016       2016        2015
Commercial:
Commercial real estate                         $                       0.9         $ 0.2       $ (0.1)    $ 0.7       $ (0.1)
Commercial and industrial                                              1.1           0.4         1.1        2.2         3.5
Equipment financing                                                    1.3           1.3         2.1        1.6         1.4
Total                                                                  3.3           1.9         3.1        4.5         4.8
Retail:
Residential mortgage                                                   -             0.4         0.7        -           0.1
Home equity                                                            1.3           0.1         1.2        1.4         1.1
Other consumer                                                         0.1           0.1         0.1        0.1         0.2
Total                                                                  1.4           0.6         2.0        1.5         1.4
Total net loan charge-offs                     $                       4.7         $ 2.5       $ 5.1      $ 6.0       $ 6.2
Net loan charge-offs to
average total loans (annualized)                                       0.06        % 0.04      % 0.07     % 0.09      % 0.09     %
People’s United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP
In addition to evaluating People’s United Financial Inc. ("People’s United") results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as the efficiency and tangible common 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’s underlying operating performance and trends, and facilitates comparisons with the performance of other financial institutions. 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 common equity ratio and tangible book value per share are used to analyze the relative strength of People’s United’s capital position.
The efficiency ratio, which represents an approximate measure of the cost required by People’s United to generate a dollar of revenue, is the ratio of (i) total non-interest expense (excluding operating lease expense, goodwill impairment charges, amortization of other acquisition-related intangible assets, losses on real estate assets and non-recurring expenses, which are also excluded in arriving at operating non-interest expense) (the numerator) to (ii) net interest income on a fully taxable equivalent ("FTE") basis plus total non-interest income (including the FTE adjustment on bank-owned life insurance ("BOLI") income, the netting of operating lease expense and excluding gains and losses on sales of assets other than residential mortgage loans and acquired loans, and non-recurring income) (the denominator). People’s United 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 available to common shareholders 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’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: (i) non-recurring gains/losses; (ii) merger-related expenses, including acquisition integration and other costs; (iii) writedowns of banking house assets and related lease termination costs; (iv) severance-related costs; and (v) charges related to executive-level management separation costs, are generally also excluded when calculating the efficiency ratio. Effective with the quarter ended March 31, 2016, recurring writedowns of banking house assets and certain severance-related costs are no longer considered to be non-operating expenses. Operating earnings per common share is derived by determining the per share impact of the respective adjustments to arrive at operating earnings and adding (subtracting) such amounts to (from) earnings per common share, as reported. Operating return on average assets is calculated by dividing operating earnings (annualized) by average total assets. Operating return on average tangible common equity is calculated by dividing operating earnings (annualized) by average tangible common equity. The operating dividend payout ratio is calculated by dividing dividends paid by operating earnings for the respective period.
The tangible common equity ratio is the ratio of (i) tangible common equity (total stockholders’ equity less preferred stock, goodwill and other acquisition-related intangible assets) (the numerator) to (ii) tangible assets (total assets less goodwill and other acquisition-related intangible assets) (the denominator). Tangible book value per share is calculated by dividing tangible common equity by common shares (total common shares issued, less common shares classified as treasury shares and unallocated Employee Stock Ownership Plan ("ESOP") common shares).
In light of diversity in presentation among financial institutions, the methodologies used by People’s United 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 AND OPERATING NON-INTEREST EXPENSE
                                                         Three Months Ended                         Twelve Months Ended
                                           Dec. 31,      Sept. 30,  June 30,   March 31,  Dec. 31,  Dec. 31,   Dec. 31,
(dollars in millions)                      2016          2016       2016       2016       2015      2016       2015
Total non-interest expense                 $  217.2      $  221.4   $  212.9   $  217.3   $  217.0  $   868.8  $   860.6
Adjustments to arrive at operating
non-interest expense:
Merger-related expenses                    (0.9)         (3.1)      -          -          -         (4.0)      -
Acquisition integration and other costs    (0.7)         -          -          -          -         (0.7)      -
Writedowns of banking house assets         -             -          -          -          (2.5)     -          (10.5)
Severance-related costs                    -             -          -          -          (1.3)     -          (2.4)
Total                                      (1.6)         (3.1)      n/a        n/a        (3.8)     (4.7)      (12.9)
Operating non-interest expense             215.6         218.3      n/a        n/a        213.2     864.1      847.7
Operating lease expense                    (8.3)         (9.7)      (9.1)      (9.2)      (9.4)     (36.3)     (37.1)
Amortization of other acquisition-related
intangible assets                          (6.2)         (5.8)      (5.8)      (5.8)      (6.1)     (23.6)     (23.9)
Other (1)                                  (0.6)         (1.8)      (1.8)      (1.5)      (2.2)     (5.7)      (7.8)
Total non-interest expense for
efficiency ratio                           $  200.5      $  201.0   $  196.2   $  200.8   $  195.5  $   798.5  $   778.9
Net interest income (FTE basis)            $  255.2      $  254.2   $  247.7   $  247.4   $  245.3  $ 1,004.5  $   957.3
Total non-interest income                  84.2          90.8       85.4       82.3       93.3      342.7      352.4
Total revenues                             339.4         345.0      333.1      329.7      338.6     1,347.2    1,309.7
Adjustments:
Operating lease expense                    (8.3)         (9.7)      (9.1)      (9.2)      (9.4)     (36.3)     (37.1)
BOLI FTE adjustment                        0.7           0.6        1.0        0.5        0.5       2.8        2.4
Net security losses (gains)                6.0           -          -          (0.1)      -         5.9        -
Gain on sale of business, net of expenses  -             -          -          -          (9.2)     -          (9.2)
Other (2)                                  0.2           (0.3)      -          (0.7)      -         (0.8)      (0.1)
Total revenues for efficiency ratio        $  338.0      $  335.6   $  325.0   $  320.2   $  320.5  $ 1,318.8  $ 1,265.7
Efficiency ratio                           59.3%         59.9%      60.4%      62.7%      61.0%     60.5%      61.5%
n/a  For the three months ended June 30, 2016 and March 31, 2016, no expenses were considered to be non-operating expenses.
Accordingly, operating metrics were not applicable.
(1)  Items classified as "other" and deducted from non-interest expense for purposes of calculating the efficiency ratio include,
as applicable, certain franchise taxes, real estate owned expenses, contract termination costs and non-recurring expenses.
(2)  Items classified as "other" and added to (deducted from) total revenues for purposes of calculating the efficiency ratio include,
as applicable, asset write-offs and gains associated with the sale of branch locations.
People’s United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
OPERATING EARNINGS
                                                                           Three Months Ended                        Twelve Months Ended
                                              Dec. 31,           Sept. 30,          June 30,   March 31,  Dec. 31,   Dec. 31,   Dec. 31,
(dollars in millions, except per share data)  2016               2016               2016       2016       2015       2016       2015
Net income available to common shareholders   $    74.1          $    73.7          $    68.5  $    62.9  $    70.8  $  279.2   $  260.1
Adjustments to arrive at operating earnings:
Merger-related expenses                       0.9                3.1                -          -          -          4.0        -
Acquisition integration and other costs       0.7                -                  -          -          -          0.7        -
Writedowns of banking house assets            -                  -                  -          -          2.5        -          10.5
Severance-related costs                       -                  -                  -          -          1.3        -          2.4
Gain on sale of business, net of expenses     -                  -                  -          -          (9.2)      -          (9.2)
Total pre-tax adjustments                     1.6                3.1                n/a        n/a        (5.4)      4.7        3.7
Tax effect                                    (0.6)              (1.0)              n/a        n/a        1.8        (1.6)      (1.3)
Total adjustments, net of tax                 1.0                2.1                n/a        n/a        (3.6)      3.1        2.4
Operating earnings                            $    75.1          $    75.8          n/a        n/a        $    67.2  $  282.3   $  262.5
Earnings per common share, as reported        $    0.24          $    0.24          $    0.23  $    0.21  $    0.23  $    0.92  $    0.86
Adjustments to arrive at operating
earnings per common share:
Merger-related expenses                       -                  0.01               -          -          -          0.01       -
Acquisition integration and other costs       -                  -                  -          -          -          -          -
Writedowns of banking house assets            -                  -                  -          -          0.01       -          0.03
Severance-related costs                       -                  -                  -          -          -          -          -
Gain on sale of business, net of expenses     -                  -                  -          -          (0.02)     -          (0.02)
Total adjustments per share                   -                  0.01               n/a        n/a        (0.01)     0.01       0.01
Operating earnings per common share           $    0.24          $    0.25          n/a        n/a        $    0.22  $    0.93  $    0.87
Average total assets                          $40,623            $40,304            $39,422    $38,773    $37,955    $39,784    $36,894
Operating return on
average assets (annualized)                   0.74%              0.75%              n/a        n/a        0.71%      0.71%      0.71%
OPERATING RETURN ON AVERAGE TANGIBLE COMMON EQUITY
                                                                           Three Months Ended                        Twelve Months Ended
                                              Dec. 31,           Sept. 30,          June 30,   March 31,  Dec. 31,   Dec. 31,   Dec. 31,
(dollars in millions)                         2016               2016               2016       2016       2015       2016       2015
Operating earnings                            $    75.1          $    75.8          n/a        n/a        $    67.2  $  282.3   $  262.5
Average stockholders’ equity                  $  5,039           $  4,841           $  4,795   $  4,761   $  4,736   $  4,859   $  4,697
Less: Average preferred stock                 165                -                  -          -          -          41         -
Average common equity                         4,874              4,841              4,795      4,761      4,736      4,818      4,697
Less: Average goodwill and average other
acquisition-related intangible assets         2,094              2,073              2,079      2,085      2,092      2,083      2,094
Average tangible common equity                $  2,780           $  2,768           $  2,716   $  2,676   $  2,644   $  2,735   $  2,603
Operating return on average tangible
common equity (annualized)                    10.8%              11.0%              n/a        n/a        10.2%      10.3%      10.1%
OPERATING DIVIDEND PAYOUT RATIO
                                              Three Months Ended                                                     Twelve Months Ended
                                              Dec. 31,           Sept. 30,          June 30,   March 31,  Dec. 31,   Dec. 31,   Dec. 31,
(dollars in millions)                         2016               2016               2016       2016       2015       2016       2015
Dividends paid                                $    51.7          $    51.7          $    51.7  $    50.6  $    50.6  $  205.7   $  201.2
Operating earnings                            $    75.1          $    75.8          n/a        n/a        $    67.2  $  282.3   $  262.5
Operating dividend payout ratio               68.8%              68.2%              n/a        n/a        75.3%      72.9%      76.6%
n/a  For the three months ended June 30, 2016 and March 31, 2016, no expenses were considered to be non-operating expenses.
Accordingly, operating metrics were not applicable.
People’s United Financial, Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP - continued
TANGIBLE COMMON EQUITY RATIO
                                            Dec. 31,   Sept. 30,  June 30,   March 31,  Dec. 31,
(dollars in millions)                       2016       2016       2016       2016       2015
Total stockholders’ equity                  $  5,142   $  4,862   $  4,830   $  4,791   $  4,732
Less: Preferred stock                       244        -          -          -          -
Common equity                               4,898      4,862      4,830      4,791      4,732
Less: Goodwill and other
acquisition-related intangible assets       2,142      2,070      2,076      2,079      2,088
Tangible common equity                      $  2,756   $  2,792   $  2,754   $  2,712   $  2,644
Total assets                                $40,610    $40,692    $40,150    $39,264    $38,947
Less: Goodwill and other
acquisition-related intangible assets       2,142      2,070      2,076      2,079      2,088
Tangible assets                             $38,468    $38,622    $38,074    $37,185    $36,859
Tangible common equity ratio                7.2%       7.2%       7.2%       7.3%       7.2%
TANGIBLE BOOK VALUE PER SHARE
                                            Dec. 31,   Sept. 30,  June 30,   March 31,  Dec. 31,
(in millions, except per share data)        2016       2016       2016       2016       2015
Tangible common equity                      $  2,756   $  2,792   $  2,754   $  2,712   $  2,644
Common shares issued                        405.00     400.13     399.74     399.54     399.24
Less: Shares classified as treasury shares  89.06      89.05      89.05      89.04      89.06
Unallocated ESOP shares                     6.97       7.06       7.14       7.23       7.32
Common shares                               308.97     304.02     303.55     303.27     302.86
Tangible book value per share               $    8.92  $    9.18  $    9.07  $    8.94  $    8.73

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/peoples-united-financial-reports-fourth-quarter-net-income-of-759-million-or-024-per-common-share-300393843.html

SOURCE People’s United Bank

https://rt.prnewswire.com/rt.gif?NewsItemId=NY91531&Transmission_Id=201701191601PR_NEWS_USPR_____NY91531&DateId=20170119



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