d pbct - cfa research challenge · premium brand built over 170 years corporate overview people’s...
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CFA Institute Research Challenge – Kickoff Meeting
October 25, 2016NASDAQ: PBCT
Premium Brand Built Over 170 YearsCorporate OverviewCorporate Overviewpp
People’s United Financial, Inc. NASDAQ (PBCT)
Headquarters Bridgeport, CT
Chief Executive Officer Jack Barnes
Chief Financial Officer David Rosato
M k t C it li ti $5 0 billiMarket Capitalization (10.21.2016) $5.0 billion
Assets $40.7 billion
Loans $29.4 billion
Deposits $29.7 billion
Branches 386
In-store Branches(2) 146
ATMs 592
Standalone ATMs(3) 110
F d d 1842
1
Founded 1842
1 Statistics as of September 30, 2016, unless noted otherwise2 Exclusive relationship with Stop & Shop3 Includes 36 ATMs in Stop & Shop locations where a branch is not present
Premium Brand Built Over 170 Years
Acquired:Chitt d C
Geographic Expansion in Recent YearsGeographic Expansion in Recent Years
Chittenden Corp. which comprised:
Chittenden Bank Burlington, VT
Ocean BankPortsmouth, NH
Maine Bank & Trust
Acquired:57 branches in greater New York metro area from RBS Citizens –
including 53 branches in Stop & Shop
Acquired:Danversbank
Acquired:Financial Federal
New York, NY
A i d
June 27Announced
acquisition of:Suffolk Bancorp
Portland, ME
Merrill BankBangor, ME
Flagship BankWorcester, MA
Bank of West. Mass.Springfield, MA
p psupermarkets
Since 1995, PBCT has had an exclusive
relationship with Stop & Shop to operate
branches in Connecticut
Danvers, MAAcquired:Butler Bank
Lowell, MA
RiverBankNorth Andover, MA
Bank of SmithtownSmithtown, NY
Suffolk BancorpRiverhead, NY
p gstores
2016201620102010 20112011 2012201220082008
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Premium Brand Built Over 170 YearsInIn--Store Branches Versus Traditional BranchesStore Branches Versus Traditional Branches
• Partnership allows us to leverage People’s United brand with the ~3.3 million shoppers who visit Connecticut and New York Stop & Shop stores every week
• In-store locations operate under the same business model as traditional branches and sell all of the Bank’s products and services
• Connecticut and New York in-store branches accounted for a significant portion of the new branch business booked
In-Store Branches Traditional Branches100%
40%40% 43%43%57%57%
70%70% 76%76% 69%69% 72%72%
60%60% 57%57% 43%43%30%30% 24%24% 31%31% 28%28%
- %
On average, inOn average, in--store locations are open 37% more hours per week (56 hours vs. store locations are open 37% more hours per week (56 hours vs.
Consumer Checking Accounts Opened
Savings Accounts Opened
Business Checking Accounts Opened
Home Equity Loans Originations
Mortgage Loan Originations
Business Banking Loan Originations
Investment Sales
Last twelve months through September 30, 2016
3Note: statistics represent Connecticut and New York branches only
41 hours), but are approximately ~30% less expensive to operate.41 hours), but are approximately ~30% less expensive to operate.
NN P itiP iti Y i B kiY i B ki P f i l E iP f i l E i
Experienced Leadership Team
Jack Barnes President & CEO, Director 30+ People’s United Bank (SEVP, CAO), Chittenden, FDIC
G l D k SEVP W lth M t 30+ People’s United Bank, Washington Trust, The
NameName PositionPosition Years in BankingYears in Banking Professional ExperienceProfessional Experience
Galan Daukas SEVP Wealth Management 30+ People s United Bank, Washington Trust, The Managers Funds, Harbor Capital Mgmt
Sara Longobardi SEVP Retail Banking 25+ People’s United Bank
People’s United Bank New York TimesDave Norton SEVP & Chief HR Officer 5+ People s United Bank, New York Times, Starwood, PepsiCo
Lee Powlus SEVP & Chief Administrative Officer 25+ People’s United Bank, Chittenden, Alltel
David Rosato SEVP & CFO 30+ People’s United Bank, Webster, M&T
Chantal Simon SEVP & Chief Risk Officer 25+ People’s United Bank, Merrill Lynch US Bank, Lazard Freres & Co.
Jeff Tengel SEVP Commercial Banking 30+ People’s United Bank PNC National CityJeff Tengel SEVP Commercial Banking 30+ People’s United Bank, PNC, National City
Bob Trautmann SEVP & General Counsel 20+ People’s United Bank, Tyler Cooper & Alcorn
Kirk Walters SEVP Corporate Development, Director 25+ People’s United Bank, Santander, Sovereign,
Chittenden Northeast FinancialDirector Chittenden, Northeast Financial
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Total Loan Portfolio: $29 4 BillionTotal Loan Portfolio: $29 4 Billion
Operate in Large & Attractive Northeast MarketsTotal Loan Portfolio: $29.4 BillionTotal Loan Portfolio: $29.4 Billion
At September 30, 2016At September 30, 2016
($ in billions) Other$5.1 / 18%
Connecticut$7.8 / 26%Maine
$1.0 / 3%
New Hampshire$1.4 / 5%
New Jersey$1.4 / 5%
New York$5.6 / 19%
Vermont$1.8 / 6%
Massachusetts$5.3 / 18%
Excluding equipment finance loans 91% of PBCT’s loan portfolio is within the NortheastExcluding equipment finance loans 91% of PBCT’s loan portfolio is within the Northeast
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Excluding equipment finance loans, ~91% of PBCT’s loan portfolio is within the NortheastExcluding equipment finance loans, ~91% of PBCT’s loan portfolio is within the Northeast
Operate in Large & Attractive Northeast MarketsConnecticutConnecticut MassachusettsMassachusettsNew YorkNew York
Branches $BN %1 Bank of America 138 30.0 23.82 People's United 149 16.5 13.13 Webster 118 16.3 12.94 Wells Fargo 76 9.0 7.15 TD Bank 71 6 8 5 4
Branches $BN %1 JP Morgan Chase 754 536.2 37.62 HSBC 146 114.7 8.03 Citi 243 88.1 6.24 Bank of America 303 83.7 5.95 M&T 282 44 9 3 2
Branches $BN %1 Bank of America 230 67.8 27.22 Citizens 245 31.3 12.63 Santander 221 18.3 7.34 TD Bank 144 13.1 5.35 Eastern Bank 89 8 0 3 25 TD Bank 71 6.8 5.4
6 JP Morgan Chase 50 5.5 4.47 Citi 14 4.2 3.38 KeyCorp 75 4.1 3.39 Liberty 55 3.5 2.710 United Financial 32 3.2 2.5
5 M&T 282 44.9 3.26 Capital One 229 44.8 3.17 KeyCorp 403 36.1 2.58 TD Bank 262 33.7 2.49 Signature 30 29.5 2.110 Wells Fargo 85 23.3 1.629 People's United 97 3 4 0 3
5 Eastern Bank 89 8.0 3.26 Independent Bank 84 6.2 2.57 First Republic 4 5.6 2.38 Boston Private 11 3.9 1.69 Middlesex 32 3.8 1.510 People's United 47 3.6 1.4
VermontVermont New HampshireNew Hampshire MaineMaine
29 People s United 97 3.4 0.3
Branches $BN %1 People's United 40 2.9 23.02 TD Bank 32 2 5 20 1
Branches $BN %1 Citizens 72 7.9 24.82 TD Bank 70 6 7 21 0
Branches $BN %1 TD Bank 48 3.5 12.92 KeyCorp 50 3 4 12 52 TD Bank 32 2.5 20.1
3 Merchants 31 1.4 10.84 KeyCorp 12 0.8 6.55 Citizens 20 0.8 6.46 Northfield 13 0.6 4.97 Union 12 0.5 3.88 Community 12 0.5 3.7
2 TD Bank 70 6.7 21.03 Bank of America 23 4.6 14.34 People's United 26 1.5 4.75 NH Mutual 19 1.2 3.86 BNH Financial 25 1.2 3.67 Santander 18 1.0 3.08 Lake Sunapee 21 0.9 2.7
2 KeyCorp 50 3.4 12.53 Camden National 63 2.8 10.44 Bangor Bancorp 56 2.5 9.25 Bank of America 17 1.8 6.76 First Bancorp 16 1.1 4.37 People's United 27 1.1 4.28 Bar Harbor 14 1.0 3.7
4th in deposit market share in New England# 1 in Fairfield County, CT., 64 branches, ~$11 billion in deposits, ~ 24% market share
8 Community 12 0.5 3.79 Passumpsic 6 0.4 2.910 Mascoma 10 0.3 2.8
8 Lake Sunapee 21 0.9 2.79 Mascoma 17 0.9 2.710 Northway 17 0.7 2.4
8 Bar Harbor 14 1.0 3.79 Machias Bancorp 18 1.0 3.610 Norway 24 0.9 3.3
6Source: SNL Financial; FDIC data as of June 30, 2016; excludes trust institutions; excludes non-retail branchesNotes: PBCT branch count updated as of September 30, 2016
Strong deposit market positionsStrong deposit market positions
Commitment to Relationship-Based BankingL t l ti hi ith t• Long-term relationships with customers
• Customers relationships are with local management
• Single point of contact with customers – break down silos to present full suite of products & services
• Senior management frequently interacts with customers
• Reputation and word-of-mouth referrals often drive new business
• Broad distribution: 386 branches across six states, 592 ATMs, online and mobile banking
Long history of focusing on relationship management at the local levelLong history of focusing on relationship management at the local level
• Call center operations locally located in Bridgeport, CT and Burlington, VT
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Long history of focusing on relationship management at the local level… Long history of focusing on relationship management at the local level…
Breadth of Products & Services
RetailRetailBankingBanking
• Retail Lending: residential mortgages, home equity loans and lines of credit, personal loans
• Deposit Products: checking accounts, savings and money market accounts
• Services: mobile banking, online banking, credit cards
• Commercial Lending: commercial finance, real estate financing, equipment loans & leasing, asset based lending, mortgage warehouse lending
• Deposit Products: checking accounts, savings and money market accounts
Commercial Commercial BankingBanking
• Treasury Management: cash management services, Online banking eTreasury+, ACH services, lockbox services, remote deposit capture, merchant card processing, payroll services, fraud protection services, liquidity and investment solutions
• Specialty Services: government banking, healthcare & non-profit banking, interest rate risk management, international services, business aircraft finance
• Insurance: commercial coverage employee benefits bonding risk management services specialized
Wealth Wealth
• Insurance: commercial coverage, employee benefits, bonding, risk management services, specialized industry insurance
• Wealth Services & Solutions: financial planning, trust & estate solutions, investment management, private b ki lf di t d i ti ti t l i i tit ti l t t iManagementManagement
hil idi th f ll b dth f l ti l b khil idi th f ll b dth f l ti l b k
banking, self-directed investing, retirement plan services, institutional trust services
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…while providing the same full breadth of solutions as larger banks…while providing the same full breadth of solutions as larger banks
Breadth of Products & Services
Total Loan Portfolio: $29.4 BillionTotal Loan Portfolio: $29.4 BillionAt September 30, 2016At September 30, 2016
RetailRetail
CommercialCommercial
RetailRetail$8.2 Billion / 28%$8.2 Billion / 28%
$21.2 Billion / 72%$21.2 Billion / 72%
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(At September 30, 2016)Breadth of Products & Services
Commercial Real EstateCommercial Real Estate$10.0 Billion / 34% of Total Portfolio$10.0 Billion / 34% of Total Portfolio
Commercial & IndustrialCommercial & Industrial$8.2 Billion / 28% of Total Portfolio$8.2 Billion / 28% of Total Portfolio
Equipment FinancingEquipment Financing$3.0 Billion / 10% of Total Portfolio$3.0 Billion / 10% of Total Portfolio
Commercial Loans: $21.2 Billion / 72% of Total Portfolio
($ in billions) ($ in billions) ($ in billions)
Packaging
Service3%
Other5%
Health Services
2%
Arts/Ent./Rec.2%
Construction2%
Information1%
Public Admin.1%
Other1%
Health care1%Self Storage
2%Special Use
2%Packaging
4%
Manufact.5%
Transp. / Utility3%
2%Hosp. & Entertain.
5%
Wholesale Dist.
5%ResidentialResidential
(Multi(Multi--Family)Family)3 %3 %
Industrial /Manufacturing
6%
Finance & Finance & Insurance Insurance
20%20%
RetailRetailSalesSales
8%8% Transportation/ Utility
37%W tW tReal Estate Real Estate
37%37%
RetailRetail25%25%
Office BuildingsOffice Buildings21%21% ServiceService
17%17%
ManufacturingManufacturing13%13%
Wholesale Wholesale Dist.Dist.
HealthHealth11%11%
37%
ConstructionConstruction13%13%
Finance, Finance, InsuranceInsurance
& Real Estate& Real Estate
WasteWaste6%6%
PrintingPrinting6%6%
10%10%
12%12% 14%14%
B dl di ifi d i l l tf liB dl di ifi d i l l tf li
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Broadly diversified commercial loan portfolioBroadly diversified commercial loan portfolio
Conservative & Well-Defined Underwriting CultureA A l N t ChA A l N t Ch Off / A LOff / A LAverage Annual Net ChargeAverage Annual Net Charge--Offs / Average LoansOffs / Average Loans
Peer Group Comparison 2007Peer Group Comparison 2007--20152015
2.50%
2.00%
1.00%
1.50%
Median, excluding PBCT = 0.96%
0.50%
0 20%
Conservative underwriting is a hallmark of People’s UnitedConservative underwriting is a hallmark of People’s United
0.00%
0.20%
PBCT
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Conservative underwriting is a hallmark of People’s UnitedConservative underwriting is a hallmark of People’s United
Source: SNL Financial
Proactive Expense Management• People’s United has proactively managed expenses while also making significant investments in:
Talent and systems amidst a regulatory environment of heightened expectations
Revenue and deposit gathering initiatives
Improving customer experiences via enhanced delivery of products and services
Total NonTotal Non--Interest ExpenseInterest Expense
$872$831 $839 $842 $861
($ in millions)
$
2011 2012 2013 2014 2015
Continued execution of strong cost controlsContinued execution of strong cost controls
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gg
Consistent Return of Capital to Shareholders
Annual Common Stock DividendAnnual Common Stock Dividend
$0.80
$0.52
$0.58$0.61 $0.62 $0.63 $0.64 $0.65 $0.66 $0.67 $0.68
$0.60
$0.70
$0.30$0.32
$0.36
$0.41
$0.46
$0 30
$0.40
$0.50
$0 09$0.11
$0.14$0.18
$0.22$0.25
$0.28$
$0 10
$0.20
$0.30
Increased annual common stock dividend for 23 consecutive yearsIncreased annual common stock dividend for 23 consecutive years
$0.01
$0.07$0.09
$0.00
$0.10
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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Increased annual common stock dividend for 23 consecutive yearsIncreased annual common stock dividend for 23 consecutive years
P i b d b iltP i b d b ilt
PBCT Differentiators
E i dE i d
Premium brand built Premium brand built over 170 yearsover 170 years
Deep focus onDeep focus on Experienced Experienced leadership teamleadership team
Deep focus on Deep focus on expense managementexpense management
Operate in large & Operate in large & attractive Northeast attractive Northeast
markets…markets…
Conservative & wellConservative & well--defined underwriting defined underwriting
cultureculture
A Uniquely Positioned Franchise
…with significant …with significant knowledge at the local knowledge at the local
l ll lBreadth of products Breadth of products
& services& services
A Uniquely Positioned Franchise
levellevel
Commitment to Commitment to
& services& services
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relationshiprelationship--based based bankingbanking