People's United Bank (PBCT) Reports In-Line Q1 EPS

People's United Bank (NASDAQ: PBCT) reported Q1 EPS of $0.33, in-line with the analyst estimate of $0.33. Revenue for the quarter came in at $440.5 million versus the consensus estimate of $434.13 million.

• Net income totaled $114.6 million, or $0.30 per common share.
  • Net income available to common shareholders totaled $111.1 million.
  • Operating earnings totaled $123.0 million, or $0.33 per common share (see Non-GAAP Financial Measures and Reconciliation to GAAP).
• Net interest income totaled $332.8 million in 1Q19 compared to $332.6 million in 4Q18.
• Net interest margin increased three basis points from 4Q18 to 3.20% reflecting:
  • Higher yields on the loan portfolio (increase of 15 basis points).
  • Higher yields on the securities portfolio (increase of one basis point).
  • Higher rates on deposits and borrowings (net decrease of nine basis points).
  • Two fewer calendar days in 1Q19 (decrease of four basis points).
• Provision for loan losses totaled $5.6 million.
  • Net loan charge-offs totaled $5.1 million.
  • Net loan charge-off ratio of 0.06% in 1Q19.
• Non-interest income totaled $94.6 million in 1Q19 compared to $88.7 million in 4Q18.
  • Insurance revenue increased $3.8 million.
  • Customer interest rate swap income decreased $4.0 million.
  • Commercial banking lending fees decreased $1.8 million.
  • Bank service charges decreased $1.7 million.
  • Net security losses of $10.0 million in 4Q18 incurred in response to a tax reform-related benefit recognized in the period (see Non-GAAP Financial Measures and Reconciliation to GAAP).
  • At March 31, 2019, assets under administration totaled $25.5 billion, of which $9.3 billion are under discretionary management, compared to $23.3 billion and $8.6 billion, respectively, at December 31, 2018.
• Non-interest expense totaled $277.2 million in 1Q19 compared to $262.7 million in 4Q18.
  • Operating non-interest expense totaled $262.2 million in 1Q19 (see Non-GAAP Financial Measures and Reconciliation to GAAP).
  • Compensation and benefits expense, excluding $1.5 million and $3.5 million of merger-related expenses in 1Q19 and 4Q18, respectively, increased $5.9 million, primarily reflecting seasonally higher payroll and benefit-related costs in 1Q19.
  • Professional and outside services expense, excluding $1.2 million and $3.7 million of merger-related expenses in 1Q19 and 4Q18, respectively, increased $1.1 million.
  • Other non-interest expense includes merger-related expenses of $11.9 million and $0.2 million in 1Q19 and 4Q18, respectively.
  • The efficiency ratio was 57.3% for 1Q19 compared to 55.1% for 4Q18 and 59.4% for 1Q18 (see Non-GAAP Financial Measures and Reconciliation to GAAP).
• The effective income tax rate was 20.8% for 1Q19 and 18.8% for the full-year of 2018.
  • The rate in 2018 reflects a $9.2 million benefit recognized in connection with tax reform.

"We are pleased with our first quarter performance and continued success enhancing profitability," said Jack Barnes, Chairman and Chief Executive Officer. "Operating earnings of $123 million grew 18 percent from a year ago and operating return on average tangible common equity of 14.4 percent improved 60 basis points. Total revenues increased 11 percent year-over-year due to both higher net interest income and non-interest income. The quarter benefited from the First Connecticut acquisition and further net interest margin expansion primarily resulting from higher yields on new business. With the acquisition of BSB Bancorp complete, we are excited to leverage our expanded customer and employee base to build upon our strong organic growth in Massachusetts, particularly in the Greater Boston area. Integration has gone very well, core systems conversion will take place in the third quarter, and we remain confident in achieving the transaction's attractive financial returns. In addition, we are proud to announce an increase to our common dividend for the 26th consecutive year, which demonstrates our commitment to deliver shareholder value through a consistent return of capital."

"In what is typically a seasonally slower quarter for loan growth, total period-end loans increased one percent from year-end," said David Rosato, Senior Executive Vice President and Chief Financial Officer. "Solid results across C&I businesses and equipment finance more than offset lower commercial real estate balances, reflecting the importance of our portfolio's diversification. We are encouraged with our ongoing success gathering deposits as period-end balances were up two percent during the quarter, lowering the loan-to-deposit ratio to 96 percent. Asset quality was once again exceptional in each of our portfolios as net charge-offs of six basis points improved linked-quarter from an already low level. While the credit environment has continued to be benign for an extended period, we remain committed to our conservative and well-defined approach to underwriting that has served us well for many years."

For earnings history and earnings-related data on People's United Bank (PBCT) click here.

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