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People's United Financial (PBCT)

Q4 2010 Earnings Call

January 21, 2011 11:00 am ET


Peter Goulding - VP, IR

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Previous Statements by PBCT
» People’s United Financial CEO Discusses Q3 2010 Results - Earnings Call Transcript
» People’s United Financial Q2 2010 Earnings Call Transcript
» People's United Financial, Inc. Q1 2010 Earnings Call Transcript

Paul Burner - Chief Financial Officer, Senior Executive Vice President, Chief Financial Officer of People's United Bank and Senior Executive Vice President of People's United Bank

John Barnes - Chief Executive Officer, President, Director, Member of Treasury & Finance Committee, Chief Executive Officer of the People's United Bank, President of the People's United Bank and Director of the People's United Bank


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Good day, ladies and gentlemen, and welcome to the People's United Financial Inc. Fourth Quarter Earnings Conference Call. My name is Tuwanda, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Mr. Peter Goulding, Vice President of Investor Relations for People's United Financial Inc. 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 1 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, and good morning, everyone. Thank you for joining us today. Before we go through the slides that we provided, I'd like to remind you that our objectives have been, and continue to be straightforward and twofold: To optimize existing business and to efficiently deploy the excess capital. I'm glad to be able to provide a number of details today regarding our progress against those two objectives.

Regarding our agenda today. First, we'll discuss our fourth quarter 2010 results and the primary revenue initiatives we have underway. Second, we'll have an update on the integration of our four acquisitions closed in 2010 and our de novo branches in downtown Boston. Finally, I look forward to speaking with you on about our Danvers Bancorp acquisition, and then we'll take questions.

Regarding growth, we're well-positioned versus the industry, and that we have a number of products and services that we can deliver to new markets to represent real organic growth opportunities for us. Now, we have to continue just to execute on that plan. In addition to those growth opportunities, we also remain significantly over capitalized, and intend to continue to look for well-priced acquisitions to better leverage our brand. Finally, we constantly evaluate the returns available to us via share repurchases.

On Slide 3, we've provided an overview of our fourth quarter results. Operating net income for the quarter was $36.7 million, or $0.10 per share, excluding $4.7 million, or $0.01 per share for one-time cost, primarily related to mergers.

Our net interest margin expanded by 12 basis points in the fourth quarter to 3.85% from 3.73% in the third quarter. Importantly, asset quality improved with net charge-offs declining 228 basis points from 57 basis points in the prior quarter. Our NPAs decreased in the fourth quarter to 2.07% from 2.18% in the third quarter. Our net loans grew by $221 million compared to the previous quarter.

On Slide 4, we reviewed key recent initiatives. Our acquisitions of the Bank of Smithtown and RiverBank, both closed November 30, and we are off to a great start. As expected, we opened both our Boston branches at the Prudential Center and at Milk Street by the middle of last month, and these branches are doing very, very well.

As of January 1, Jeff Tengel, who had joined us in the first quarter of last year, took over as Head of Commercial Banking business area as planned, following Brian Dreyer's retirement. Jeff has over 25 years of commercial banking experience. Most recently, he was at PNC, following PNC's acquisition of National City. At National City, Jeff was Executive Vice President of Corporate Banking and was a member of the executive management team. As you get to know Jeff, you're going to learn that he's an excellent relationship-based commercial banker with a strong understanding of all of our business lines.

During the fourth quarter, we repurchased $114 million of our common stock equal to 8.7 million shares through open market purchases at an average price of $13.08. Because these repurchases leave us with only 2.9 million shares remaining under the initial share repurchase authorization, our Board has also authorized an additional repurchase program for another 5% of our outstanding shares.

With that, I'll turn it back to Paul to provide you with details on the quarter beginning on Page 5. Paul?

Paul Burner

Thank you, Jack, and good morning to you, all. As Jack mentioned, our overall net interest margin expanded to 3.85%, up 12 basis points from the third quarter. The primary drivers were both an increase in asset yields, as well as a decrease in interest expense. We are pleased to have our deposit cost drop by another six basis points in the quarter to 64 basis points. I would expect the net interest margin to remain at the 3.85% level in 2011.

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