People’s United Financial, Inc. (



Q3 2010 Earnings Conference Call

October 22, 2010 11 AM ET


Peter Goulding – VP, IR

John Barnes – President and CEO

Paul Burner – SVP and CFO

Brian Dreyer – Senior EVP, Commercial Banking Group


Mark Fitzgibbon – Sandler O’Neill

Ken Zerbe – Morgan Stanley

Damon DelMonte – Keefe, Bruyette, & Woods, Inc.

Christopher Nolan – CRT Capital Group LLC

Bob Ramsey – FBR Capital Markets & Co.

Richard Weiss – Janney Montgomery Scott LLC

Collyn Gilbert – Stifel, Nicolaus & Co., Inc.

Matthew Kelley – Sterne Agee & Leach Inc.

Steven Alexopoulos – JP Morgan Chase & Co.



Compare to:
Previous Statements by PBCT
» People’s United Financial Q2 2010 Earnings Call Transcript
» People's United Financial, Inc. Q1 2010 Earnings Call Transcript
» People's United Financial, Inc. Q4 2009 Earnings Call Transcript
» People’s United Financial Inc. Q3 2009 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the People’s United Financial Incorporated Third Quarter Earnings Conference Call. My name is Katina and I will be your coordinator for today.

(Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Peter Goulding, Vice President of Investor Relations for People’s United Financial. Please proceed, sir.

Peter Goulding

Good morning, and thank you for joining us for today’s call. Jack Barnes, President and Chief Executive Officer; Paul Burner, our Chief Financial Officer; and other members of our management team are gathered for the call.

Before we get started, please remember to refer to our forward-looking statements on Slide one of our presentation, which is posted on our website, under Investor Relations. With that, I’ll turn the call over to Jack.

John Barnes

Thank you, Peter. Good morning, everyone, and thank you for joining us today. As you know, today, we’ll be reviewing our earnings for the third quarter and we look forward to your questions after our comments are complete.

Before we go through these slides, I’d like to share with you some of my perspective on our two primary strategic objectives. First, to optimize the existing business and second, to sufficiently deploy our excess capital.

With regard to optimizing our business, we believe we have a more robust opportunities set relative to many in the industry. We continue to work towards additional revenue synergies made available from completed acquisitions over the last several years. We have active initiatives currently underway relative to these opportunities in all of our business lines.

Certainly, the acquisitions of Bank of Smithtown and RiverBank and our branch openings in Boston all of which we expect to close by year end will create additional opportunity to enhance revenue going forward.

On the capital deployment front, we have an organized acquisition plan and a targeted effort is underway. Our management team has continued to build relationships within the industry, which we believe will lead to attractive combinations. The challenge, of course, has always relates to different views on price.

Today, we feel sellers are becoming more realistic with respect to price as a result of challenges facing the industry. The value of the synergies from consolidation relative to the value available following an independent path should add momentum to these conversations.

On Slide three, we’ve provided an overview of our third quarter results.

Operating net income for the quarter was $27.7 million or $0.08 per share, excluding $5.3 million or $0.01 per share for one-time cost related to the system conversion and mergers. Net interest margin exceeded – excuse me, expanded by five basis points from 3.8% in the second quarter to 3.73% in the third quarter as a result of a higher investment yield and lower deposit cost.

Asset quality remains strong. However, net charge-offs grew to 57 basis points versus 46 basis points in the prior quarter. As we discussed in the press release, two construction projects represent 45% of the quarter’s net charge-offs. These credits did have specific reserves against them.

Given the increase in NPAs and the climate of persistently high unemployment and weak economics, we felt it was prudent to cover our net charge-offs.

Importantly, we continue to feel comfortable that our asset quality metrics will remain at low levels.

Finally, while growth and commercial banking portfolio was offset by declines in our residential mortgage and consumer lending, we are pleased by our strong pipeline for commercial and residential mortgages as we move into the fourth quarter.

Slide four addresses our current initiatives. Our system conversion is complete and we are now operating as single scalable platform. The rebranding of our branches in the Vermont, New Hampshire, Massachusetts and Maine markets is also effectively complete.

Our acquisitions of Smithtown Bancorp and LSB Corp. are both expected to close next month – providing, of course, that all the necessary shareholder and regulatory approvals take place.

Additionally, we are set to open our Boston branches in the Prudential Center and on Financial Street before year ends.

During the third quarter, we repurchased $25 million of our common stock equal to 1.9 million shares and an average price of $13.29. This was limited because of the stock component of our pending Bank of Smithtown transactions. The repurchase program was affected through open market purchases.

We will continue to evaluate the returns available to us via the share repurchases relative to the rest of our capital deployment opportunities.

With that, I’ll hand it over to Paul to provide you with details on the quarter. Paul?

Paul Burner

Thank you, Jack, and good morning to you all. As Jack mentioned, our overall net interest margin expanded to 3.73%, up five basis points from the second quarter driven by higher investment yields and lower deposit cost. In the third quarter, we had $800 million more on securities on average than in the second quarter.

Read the rest of this transcript for free on