0001378946us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2019-01-012019-09-30
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2019
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
PEOPLE’S UNITED FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter) | ||||||||||||||
Delaware | 20-8447891 | |||||||||||||||||||
(State or other jurisdiction of
| (I.R.S. Employer
| |||||||||||||||||||
850 Main Street | ||||||||||||||||||||
Bridgeport, Connecticut | 06604 | |||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
(203) 338-7171 | ||||||||||||||||||||
(Registrant's telephone number, including area code) |
(203)338-7171
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Common Stock, $0.01 par value per share | PBCT | NASDAQ Global Select Market | ||||||||||||
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share | PBCTP | NASDAQ Global Select Market |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||||
Emerging growth company | ☐ |
Part I – Financial Information | Page | |||||||||||||||||
Item 1. | ||||||||||||||||||
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Item 2. | ||||||||||||||||||
Item 3. | ||||||||||||||||||
Item 4. | ||||||||||||||||||
Part II – Other Information | ||||||||||||||||||
Item 1. | ||||||||||||||||||
Item 1A. | ||||||||||||||||||
Item 2. | ||||||||||||||||||
Item 3. | ||||||||||||||||||
Item 4. | ||||||||||||||||||
Item 5. | ||||||||||||||||||
Item 6. | ||||||||||||||||||
(in millions) | September 30, 2018 | December 31, 2017 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 410.5 | $ | 505.1 | ||||
Short-term investments | 127.5 | 377.5 | ||||||
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Total cash and cash equivalents (note 2) | 538.0 | 882.6 | ||||||
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Securities (notes 2 and 13): | ||||||||
Trading debt securities, at fair value | 8.3 | 8.2 | ||||||
Equity securities, at fair value | 8.9 | 8.7 | ||||||
Debt securitiesavailable-for-sale, at fair value | 3,312.1 | 3,125.3 | ||||||
Debt securitiesheld-to-maturity, at amortized cost (fair value of $3.67 billion and $3.63 billion) | 3,742.9 | 3,588.1 | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 312.4 | 312.3 | ||||||
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Total securities | 7,384.6 | 7,042.6 | ||||||
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Loansheld-for-sale | 15.2 | 16.6 | ||||||
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Loans (note 3): | ||||||||
Commercial real estate | 10,595.5 | 11,068.7 | ||||||
Commercial and industrial | 8,568.6 | 8,731.1 | ||||||
Equipment financing | 4,209.3 | 3,905.4 | ||||||
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Total Commercial Portfolio | 23,373.4 | 23,705.2 | ||||||
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Residential mortgage | 6,911.9 | 6,805.7 | ||||||
Home equity and other consumer | 1,914.0 | 2,064.4 | ||||||
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Total Retail Portfolio | 8,825.9 | 8,870.1 | ||||||
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Total loans | 32,199.3 | 32,575.3 | ||||||
Less allowance for loan losses | (238.0 | ) | (234.4 | ) | ||||
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Total loans, net | 31,961.3 | 32,340.9 | ||||||
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Goodwill (note 6) | 2,435.2 | 2,411.4 | ||||||
Bank-owned life insurance | 407.7 | 405.0 | ||||||
Premises and equipment, net | 243.8 | 253.0 | ||||||
Other acquisition-related intangible assets (note 6) | 133.7 | 148.6 | ||||||
Other assets (notes 1, 3 and 11) | 1,013.7 | 952.7 | ||||||
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Total assets | $ | 44,133.2 | $ | 44,453.4 | ||||
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Liabilities | ||||||||
Deposits: | ||||||||
Non-interest-bearing | $ | 8,060.2 | $ | 8,002.4 | ||||
Savings | 4,048.8 | 4,410.5 | ||||||
Interest-bearing checking and money market | 15,065.3 | 15,189.1 | ||||||
Time | 6,035.9 | 5,454.3 | ||||||
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Total deposits | 33,210.2 | 33,056.3 | ||||||
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Borrowings: | ||||||||
Federal Home Loan Bank advances | 2,369.7 | 2,774.4 | ||||||
Federal funds purchased | 735.0 | 820.0 | ||||||
Customer repurchase agreements | 261.3 | 301.6 | ||||||
Other borrowings | 26.0 | 207.8 | ||||||
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Total borrowings | 3,392.0 | 4,103.8 | ||||||
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Notes and debentures | 885.6 | 901.6 | ||||||
Other liabilities (notes 1 and 11) | 686.5 | 571.8 | ||||||
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Total liabilities | 38,174.3 | 38,633.5 | ||||||
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Commitments and contingencies (notes 1 and 8) | ||||||||
Stockholders’ Equity(notes 4, 7 and 13) | ||||||||
Preferred stock ($0.01 par value; 50.0 million shares authorized; 10.0 million shares | 244.1 | 244.1 | ||||||
Common stock ($0.01 par value; 1.95 billion shares authorized; 437.7 million shares | 4.4 | 4.4 | ||||||
Additionalpaid-in capital | 6,054.3 | 6,012.3 | ||||||
Retained earnings | 1,220.9 | 1,040.2 | ||||||
Unallocated common stock of Employee Stock Ownership Plan, at cost (6.4 million shares | (131.9 | ) | (137.3 | ) | ||||
Accumulated other comprehensive loss | (270.8 | ) | (181.7 | ) | ||||
Treasury stock, at cost (89.0 million shares at both dates) | (1,162.1 | ) | (1,162.1 | ) | ||||
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Total stockholders’ equity | 5,958.9 | 5,819.9 | ||||||
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Total liabilities and stockholders’ equity | $ | 44,133.2 | $ | 44,453.4 | ||||
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(in millions) | September 30, 2019 | December 31, 2018 | |||||||||
Assets | |||||||||||
Cash and due from banks | $ | 635.2 | $ | 665.7 | |||||||
Short-term investments | 157.8 | 266.3 | |||||||||
Total cash and cash equivalents (note 3) | 793.0 | 932.0 | |||||||||
Securities (note 3): | |||||||||||
Trading debt securities, at fair value | 9.3 | 8.4 | |||||||||
Equity securities, at fair value | 7.8 | 8.1 | |||||||||
Debt securities available-for-sale, at fair value | 2,978.7 | 3,121.0 | |||||||||
Debt securities held-to-maturity, at amortized cost (fair value of $3.97 billion and $3.78 billion) | 3,805.4 | 3,792.3 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 334.0 | 303.4 | |||||||||
Total securities | 7,135.2 | 7,233.2 | |||||||||
Loans held-for-sale | 24.8 | 19.5 | |||||||||
Loans (notes 4 and 14): | |||||||||||
Commercial real estate | 12,186.9 | 11,649.6 | |||||||||
Commercial and industrial | 10,545.9 | 9,088.9 | |||||||||
Equipment financing | 4,735.6 | 4,339.2 | |||||||||
Total Commercial Portfolio | 27,468.4 | 25,077.7 | |||||||||
Residential mortgage | 9,308.7 | 8,154.2 | |||||||||
Home equity and other consumer | 2,004.3 | 2,009.5 | |||||||||
Total Retail Portfolio | 11,313.0 | 10,163.7 | |||||||||
Total loans | 38,781.4 | 35,241.4 | |||||||||
Less allowance for loan losses | (246.0) | (240.4) | |||||||||
Total loans, net | 38,535.4 | 35,001.0 | |||||||||
Goodwill (notes 2 and 7) | 2,868.1 | 2,685.7 | |||||||||
Bank-owned life insurance | 505.6 | 467.0 | |||||||||
Premises and equipment, net | 258.5 | 267.3 | |||||||||
Other acquisition-related intangible assets (notes 2 and 7) | 196.8 | 180.0 | |||||||||
Other assets (notes 1, 4, 12 and 14) | 1,754.4 | 1,091.6 | |||||||||
Total assets | $ | 52,071.8 | $ | 47,877.3 | |||||||
Liabilities | |||||||||||
Deposits: | |||||||||||
Non-interest-bearing | $ | 9,129.3 | $ | 8,543.0 | |||||||
Savings | 4,616.6 | 4,116.5 | |||||||||
Interest-bearing checking and money market | 16,727.2 | 16,583.3 | |||||||||
Time | 8,100.4 | 6,916.2 | |||||||||
Total deposits | 38,573.5 | 36,159.0 | |||||||||
Borrowings: | |||||||||||
Federal Home Loan Bank advances | 2,948.5 | 2,404.5 | |||||||||
Federal funds purchased | 1,365.0 | 845.0 | |||||||||
Customer repurchase agreements | 315.6 | 332.9 | |||||||||
Other borrowings | — | 11.0 | |||||||||
Total borrowings | 4,629.1 | 3,593.4 | |||||||||
Notes and debentures | 915.7 | 895.8 | |||||||||
Other liabilities (notes 1, 12 and 14) | 822.8 | 695.2 | |||||||||
Total liabilities | 44,941.1 | 41,343.4 | |||||||||
Commitments and contingencies (notes 1, 9 and 14) | |||||||||||
Stockholders’ Equity (notes 2, 5, 8 and 15) | |||||||||||
Preferred stock ($0.01 par value; 50.0 million shares authorized; 10.0 million shares issued and outstanding at both dates) | 244.1 | 244.1 | |||||||||
Common stock ($0.01 par value; 1.95 billion shares authorized; 487.6 million shares and 466.3 million shares issued) | 4.9 | 4.7 | |||||||||
Additional paid-in capital | 6,901.5 | 6,549.3 | |||||||||
Retained earnings | 1,449.3 | 1,284.8 | |||||||||
Unallocated common stock of Employee Stock Ownership Plan, at cost (6.0 million shares and 6.3 million shares) | (124.7) | (130.1) | |||||||||
Accumulated other comprehensive loss | (182.3) | (256.8) | |||||||||
Treasury stock, at cost (89.0 million shares at both dates) | (1,162.1) | (1,162.1) | |||||||||
Total stockholders’ equity | 7,130.7 | 6,533.9 | |||||||||
Total liabilities and stockholders’ equity | $ | 52,071.8 | $ | 47,877.3 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions, except per common share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest and dividend income: | ||||||||||||||||
Commercial real estate | $ | 114.7 | $ | 105.6 | $ | 333.2 | $ | 299.5 | ||||||||
Commercial and industrial | 93.2 | 80.0 | 265.6 | 218.7 | ||||||||||||
Equipment financing | 56.2 | 41.5 | 155.6 | 104.6 | ||||||||||||
Residential mortgage | 56.0 | 52.5 | 166.0 | 154.1 | ||||||||||||
Home equity and other consumer | 22.0 | 21.0 | 64.2 | 59.3 | ||||||||||||
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Total interest on loans | 342.1 | 300.6 | 984.6 | 836.2 | ||||||||||||
Securities | 46.6 | 37.2 | 135.7 | 112.1 | ||||||||||||
Short-term investments | 1.1 | 1.1 | 3.6 | 2.7 | ||||||||||||
Loansheld-for-sale | 0.2 | 0.3 | 0.6 | 0.7 | ||||||||||||
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Total interest and dividend income | 390.0 | 339.2 | 1,124.5 | 951.7 | ||||||||||||
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Interest expense: | ||||||||||||||||
Deposits | 56.9 | 34.4 | 145.5 | 92.4 | ||||||||||||
Borrowings | 18.2 | 12.7 | 50.9 | 28.9 | ||||||||||||
Notes and debentures | 8.5 | 7.5 | 24.7 | 22.3 | ||||||||||||
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Total interest expense | 83.6 | 54.6 | 221.1 | 143.6 | ||||||||||||
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Net interest income | 306.4 | 284.6 | 903.4 | 808.1 | ||||||||||||
Provision for loan losses (note 3) | 8.2 | 7.0 | 20.1 | 18.5 | ||||||||||||
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Net interest income after provision for loan losses | 298.2 | 277.6 | 883.3 | 789.6 | ||||||||||||
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Non-interest income: | ||||||||||||||||
Bank service charges | 24.9 | 25.3 | 73.0 | 73.8 | ||||||||||||
Investment management fees | 17.4 | 16.9 | 52.3 | 49.2 | ||||||||||||
Operating lease income | 11.0 | 10.9 | 32.9 | 32.1 | ||||||||||||
Insurance revenue | 9.8 | 9.7 | 27.9 | 26.3 | ||||||||||||
Commercial banking lending fees | 7.9 | 7.0 | 27.7 | 26.7 | ||||||||||||
Cash management fees | 7.0 | 6.8 | 20.6 | 19.6 | ||||||||||||
Brokerage commissions | 3.2 | 2.8 | 9.5 | 9.2 | ||||||||||||
Net security gains (losses) (note 2) | 0.1 | — | 0.2 | (15.6 | ) | |||||||||||
Othernon-interest income (note 2) | 11.0 | 9.9 | 33.5 | 44.3 | ||||||||||||
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Totalnon-interest income | 92.3 | 89.3 | 277.6 | 265.6 | ||||||||||||
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Non-interest expense: | ||||||||||||||||
Compensation and benefits (note 13) | 135.7 | 129.9 | 411.4 | 389.9 | ||||||||||||
Occupancy and equipment | 41.6 | 40.2 | 123.6 | 118.6 | ||||||||||||
Professional and outside services | 17.0 | 19.2 | 56.2 | 62.8 | ||||||||||||
Regulatory assessments | 10.0 | 10.3 | 30.5 | 29.8 | ||||||||||||
Operating lease expense | 8.9 | 8.8 | 26.6 | 26.3 | ||||||||||||
Amortization of other acquisition-related intangible assets (note 6) | 4.9 | 7.9 | 14.9 | 22.1 | ||||||||||||
Othernon-interest expense (note 13) | 23.2 | 20.8 | 70.2 | 71.0 | ||||||||||||
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Totalnon-interest expense | 241.3 | 237.1 | 733.4 | 720.5 | ||||||||||||
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Income before income tax expense | 149.2 | 129.8 | 427.5 | 334.7 | ||||||||||||
Income tax expense (note 1) | 32.2 | 39.0 | 92.4 | 103.8 | ||||||||||||
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Net income | 117.0 | 90.8 | 335.1 | 230.9 | ||||||||||||
Preferred stock dividend | 3.5 | 3.5 | 10.5 | 10.5 | ||||||||||||
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Net income available to common shareholders | $ | 113.5 | $ | 87.3 | $ | 324.6 | $ | 220.4 | ||||||||
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Earnings per common share(note 5): | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.26 | $ | 0.95 | $ | 0.67 | ||||||||
Diluted | 0.33 | 0.26 | 0.94 | 0.67 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions, except per common share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 136.6 | $ | 114.7 | $ | 409.2 | $ | 333.2 | |||||||||||||||||||||||||||
Commercial and industrial | 113.4 | 93.2 | 328.7 | 265.6 | |||||||||||||||||||||||||||||||
Equipment financing | 65.3 | 56.2 | 187.0 | 155.6 | |||||||||||||||||||||||||||||||
Residential mortgage | 84.7 | 56.0 | 240.9 | 166.0 | |||||||||||||||||||||||||||||||
Home equity and other consumer | 24.7 | 22.0 | 75.4 | 64.2 | |||||||||||||||||||||||||||||||
Total interest on loans | 424.7 | 342.1 | 1,241.2 | 984.6 | |||||||||||||||||||||||||||||||
Securities | 44.7 | 46.6 | 138.7 | 135.7 | |||||||||||||||||||||||||||||||
Short-term investments | 1.3 | 1.1 | 3.8 | 3.6 | |||||||||||||||||||||||||||||||
Loans held-for-sale | 0.2 | 0.2 | 0.6 | 0.6 | |||||||||||||||||||||||||||||||
Total interest and dividend income | 470.9 | 390.0 | 1,384.3 | 1,124.5 | |||||||||||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||||||||||||||
Deposits | 92.2 | 56.9 | 270.0 | 145.5 | |||||||||||||||||||||||||||||||
Borrowings | 21.5 | 18.2 | 58.6 | 50.9 | |||||||||||||||||||||||||||||||
Notes and debentures | 8.5 | 8.5 | 26.1 | 24.7 | |||||||||||||||||||||||||||||||
Total interest expense | 122.2 | 83.6 | 354.7 | 221.1 | |||||||||||||||||||||||||||||||
Net interest income | 348.7 | 306.4 | 1,029.6 | 903.4 | |||||||||||||||||||||||||||||||
Provision for loan losses (note 4) | 7.8 | 8.2 | 21.0 | 20.1 | |||||||||||||||||||||||||||||||
Net interest income after provision for loan losses | 340.9 | 298.2 | 1,008.6 | 883.3 | |||||||||||||||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||||||||||||||
Bank service charges | 27.0 | 24.9 | 78.6 | 73.0 | |||||||||||||||||||||||||||||||
Investment management fees | 17.3 | 17.4 | 50.9 | 52.3 | |||||||||||||||||||||||||||||||
Operating lease income (note 14) | 13.0 | 11.0 | 38.4 | 32.9 | |||||||||||||||||||||||||||||||
Commercial banking lending fees | 11.8 | 7.9 | 29.8 | 27.7 | |||||||||||||||||||||||||||||||
Insurance revenue | 10.3 | 9.8 | 29.5 | 27.9 | |||||||||||||||||||||||||||||||
Cash management fees | 7.3 | 7.0 | 21.2 | 20.6 | |||||||||||||||||||||||||||||||
Brokerage commissions | 2.6 | 3.2 | 8.0 | 9.5 | |||||||||||||||||||||||||||||||
Other non-interest income (note 3) | 16.7 | 11.1 | 50.5 | 33.7 | |||||||||||||||||||||||||||||||
Total non-interest income | 106.0 | 92.3 | 306.9 | 277.6 | |||||||||||||||||||||||||||||||
Non-interest expense: | |||||||||||||||||||||||||||||||||||
Compensation and benefits | 158.1 | 135.7 | 474.8 | 411.4 | |||||||||||||||||||||||||||||||
Occupancy and equipment | 45.0 | 41.6 | 133.7 | 123.6 | |||||||||||||||||||||||||||||||
Professional and outside services | 23.7 | 17.0 | 68.6 | 56.2 | |||||||||||||||||||||||||||||||
Operating lease expense | 9.9 | 8.9 | 29.2 | 26.6 | |||||||||||||||||||||||||||||||
Amortization of other acquisition-related intangible assets (note 7) | 8.0 | 4.9 | 22.7 | 14.9 | |||||||||||||||||||||||||||||||
Regulatory assessments | 5.3 | 10.0 | 18.8 | 30.5 | |||||||||||||||||||||||||||||||
Other non-interest expense | 31.4 | 23.2 | 89.2 | 70.2 | |||||||||||||||||||||||||||||||
Total non-interest expense | 281.4 | 241.3 | 837.0 | 733.4 | |||||||||||||||||||||||||||||||
Income before income tax expense | 165.5 | 149.2 | 478.5 | 427.5 | |||||||||||||||||||||||||||||||
Income tax expense (note 1) | 30.4 | 32.2 | 95.5 | 92.4 | |||||||||||||||||||||||||||||||
Net income | 135.1 | 117.0 | 383.0 | 335.1 | |||||||||||||||||||||||||||||||
Preferred stock dividend | 3.5 | 3.5 | 10.5 | 10.5 | |||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 131.6 | $ | 113.5 | $ | 372.5 | $ | 324.6 | |||||||||||||||||||||||||||
Earnings per common share (note 6): | |||||||||||||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.33 | $ | 0.97 | $ | 0.95 | |||||||||||||||||||||||||||
Diluted | 0.33 | 0.33 | 0.96 | 0.94 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 117.0 | $ | 90.8 | $ | 335.1 | $ | 230.9 | ||||||||
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Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Net actuarial loss and prior service credit related to pension | 1.5 | 0.9 | 4.5 | 2.8 | ||||||||||||
Net unrealized gains and losses on debt securitiesavailable-for-sale | (12.0 | ) | 3.6 | (56.3 | ) | 21.0 | ||||||||||
Amortization of unrealized losses on debt securities transferred | 0.7 | 0.6 | 2.3 | 1.6 | ||||||||||||
Net unrealized gains and losses on derivatives accounted | (0.3 | ) | (0.2 | ) | (2.3 | ) | (0.1 | ) | ||||||||
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Total other comprehensive (loss) income, net of tax (note 4) | (10.1 | ) | 4.9 | (51.8 | ) | 25.3 | ||||||||||
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Total comprehensive income | $ | 106.9 | $ | 95.7 | $ | 283.3 | $ | 256.2 | ||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net income | $ | 135.1 | $ | 117.0 | $ | 383.0 | $ | 335.1 | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||||||||||||||
Net actuarial loss and prior service credit related to pension and other postretirement plans | 1.0 | 1.5 | 3.9 | 4.5 | |||||||||||||||||||||||||||||||
Net unrealized gains and losses on debt securities available-for-sale | 8.6 | (12.0) | 66.2 | (56.3) | |||||||||||||||||||||||||||||||
Amortization of unrealized losses on debt securities transferred to held-to-maturity | 0.8 | 0.7 | 2.0 | 2.3 | |||||||||||||||||||||||||||||||
Net unrealized gains and losses on derivatives accounted for as cash flow hedges | 0.3 | (0.3) | 2.4 | (2.3) | |||||||||||||||||||||||||||||||
Total other comprehensive income (loss), net of tax (note 5) | 10.7 | (10.1) | 74.5 | (51.8) | |||||||||||||||||||||||||||||||
Total comprehensive income | $ | 145.8 | $ | 106.9 | $ | 457.5 | $ | 283.3 |
Nine months ended September 30, 2018 | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 244.1 | $ | 4.4 | $ | 6,012.3 | $ | 1,040.2 | $ | (137.3 | ) | $ | (181.7 | ) | $ | (1,162.1 | ) | $ | 5,819.9 | |||||||||||||
Net income | — | — | — | 335.1 | — | — | — | 335.1 | ||||||||||||||||||||||||
Total other comprehensive loss, | — | — | — | — | — | (51.8 | ) | — | (51.8 | ) | ||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (178.8 | ) | — | — | — | (178.8 | ) | ||||||||||||||||||||||
Cash dividends on preferred stock | — | — | — | (10.5 | ) | — | — | — | (10.5 | ) | ||||||||||||||||||||||
Restricted stock and performance-based | — | — | 10.8 | — | — | — | — | 10.8 | ||||||||||||||||||||||||
Employee Stock Ownership Plan | — | — | — | (0.6 | ) | 5.4 | — | — | 4.8 | |||||||||||||||||||||||
Common stock repurchased and | — | — | — | (2.4 | ) | — | — | — | (2.4 | ) | ||||||||||||||||||||||
Stock options exercised | — | — | 31.2 | — | — | — | — | 31.2 | ||||||||||||||||||||||||
Transition adjustments related to | — | — | — | 37.9 | — | (37.3 | ) | — | 0.6 | |||||||||||||||||||||||
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Balance at September 30, 2018 | $ | 244.1 | $ | 4.4 | $ | 6,054.3 | $ | 1,220.9 | $ | (131.9 | ) | $ | (270.8 | ) | $ | (1,162.1 | ) | $ | 5,958.9 | |||||||||||||
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Nine months ended September 30, 2017 | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 244.1 | $ | 4.0 | $ | 5,446.1 | $ | 949.3 | $ | (144.6 | ) | $ | (195.0 | ) | $ | (1,162.0 | ) | $ | 5,141.9 | |||||||||||||
Net income | — | — | — | 230.9 | — | — | — | 230.9 | ||||||||||||||||||||||||
Total other comprehensive income, | — | — | — | — | — | 25.3 | — | 25.3 | ||||||||||||||||||||||||
Common stock issued in Suffolk | — | 0.2 | 484.6 | — | — | — | — | 484.8 | ||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | (169.3 | ) | — | — | — | (169.3 | ) | ||||||||||||||||||||||
Cash dividends on preferred stock | — | — | — | (10.5 | ) | — | — | — | (10.5 | ) | ||||||||||||||||||||||
Restricted stock and performance-based | — | — | 9.1 | — | — | — | (0.1 | ) | 9.0 | |||||||||||||||||||||||
Employee Stock Ownership Plan | — | — | — | (0.7 | ) | 5.5 | — | — | 4.8 | |||||||||||||||||||||||
Common stock repurchased and | — | — | — | (3.3 | ) | — | — | — | (3.3 | ) | ||||||||||||||||||||||
Stock options exercised | — | 0.1 | 32.4 | — | — | — | — | 32.5 | ||||||||||||||||||||||||
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Balance at September 30, 2017 | $ | 244.1 | $ | 4.3 | $ | 5,972.2 | $ | 996.4 | $ | (139.1 | ) | $ | (169.7 | ) | $ | (1,162.1 | ) | $ | 5,746.1 | |||||||||||||
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Three months ended September 30, 2019 (in millions, except per common share data) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | 244.1 | $ | 4.9 | $ | 6,890.7 | $ | 1,388.1 | $ | (126.5) | $ | (193.0) | $ | (1,162.1) | $ | 7,046.2 | |||||||||||||||||||||||||||||||
Net income | — | — | — | 135.1 | — | — | — | 135.1 | |||||||||||||||||||||||||||||||||||||||
Total other comprehensive income, net of tax (note 5) | — | — | — | — | — | 10.7 | — | 10.7 | |||||||||||||||||||||||||||||||||||||||
Cash dividend on common stock ($0.1775 per share) | — | — | — | (69.9) | — | — | — | (69.9) | |||||||||||||||||||||||||||||||||||||||
Cash dividend on preferred stock | — | — | — | (3.5) | — | — | — | (3.5) | |||||||||||||||||||||||||||||||||||||||
Restricted stock and performance-based share awards | — | — | 6.0 | — | — | — | — | 6.0 | |||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan common stock committed to be released (note 8) | — | — | — | (0.4) | 1.8 | — | — | 1.4 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased and retired upon vesting of restricted stock awards | — | — | — | (0.1) | — | — | — | (0.1) | |||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | 4.8 | — | — | — | — | 4.8 | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | 244.1 | $ | 4.9 | $ | 6,901.5 | $ | 1,449.3 | $ | (124.7) | $ | (182.3) | $ | (1,162.1) | $ | 7,130.7 | |||||||||||||||||||||||||||||||
Nine months ended September 30, 2019 (in millions, except per common share data) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 244.1 | $ | 4.7 | $ | 6,549.3 | $ | 1,284.8 | $ | (130.1) | $ | (256.8) | $ | (1,162.1) | $ | 6,533.9 | |||||||||||||||||||||||||||||||
Net income | — | — | — | 383.0 | — | — | — | 383.0 | |||||||||||||||||||||||||||||||||||||||
Total other comprehensive income, net of tax (note 5) | — | — | — | — | — | 74.5 | — | 74.5 | |||||||||||||||||||||||||||||||||||||||
Common stock issued in BSB Bancorp acquisition (note 2) | — | 0.2 | 324.3 | — | — | — | — | 324.5 | |||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($0.53 per share) | — | — | — | (204.9) | — | — | — | (204.9) | |||||||||||||||||||||||||||||||||||||||
Cash dividends on preferred stock | — | — | — | (10.5) | — | — | — | (10.5) | |||||||||||||||||||||||||||||||||||||||
Restricted stock and performance-based share awards | — | — | 10.9 | — | — | — | — | 10.9 | |||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan common stock committed to be released (note 8) | — | — | — | (1.2) | 5.4 | — | — | 4.2 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased and retired upon vesting of restricted stock awards | — | — | — | (1.9) | — | — | — | (1.9) | |||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | 17.0 | — | — | — | — | 17.0 | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | 244.1 | $ | 4.9 | $ | 6,901.5 | $ | 1,449.3 | $ | (124.7) | $ | (182.3) | $ | (1,162.1) | $ | 7,130.7 |
Three months ended September 30, 2018 (in millions, except per common share data) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | 244.1 | $ | 4.4 | $ | 6,040.3 | $ | 1,167.9 | $ | (133.7) | $ | (260.7) | $ | (1,162.1) | $ | 5,900.2 | |||||||||||||||||||||||||||||||
Net income | — | — | — | 117.0 | — | — | — | 117.0 | |||||||||||||||||||||||||||||||||||||||
Total other comprehensive loss, net of tax (note 5) | — | — | — | — | — | (10.1) | — | (10.1) | |||||||||||||||||||||||||||||||||||||||
Cash dividend on common stock ($0.1750 per share) | — | — | — | (60.1) | — | — | — | (60.1) | |||||||||||||||||||||||||||||||||||||||
Cash dividend on preferred stock | — | — | — | (3.5) | — | — | — | (3.5) | |||||||||||||||||||||||||||||||||||||||
Restricted stock and performance-based share awards | — | — | 3.4 | — | — | — | 3.4 | ||||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan common stock committed to be released (note 8) | — | — | — | (0.3) | 1.8 | — | — | 1.5 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased and retired upon vesting of restricted stock awards | — | — | — | (0.1) | — | — | — | (0.1) | |||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | 10.6 | — | — | — | — | 10.6 | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | 244.1 | $ | 4.4 | $ | 6,054.3 | $ | 1,220.9 | $ | (131.9) | $ | (270.8) | $ | (1,162.1) | $ | 5,958.9 | |||||||||||||||||||||||||||||||
Nine months ended September 30, 2018 (in millions, except per common share data) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Unallocated ESOP Common Stock | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 244.1 | $ | 4.4 | $ | 6,012.3 | $ | 1,040.2 | $ | (137.3) | $ | (181.7) | $ | (1,162.1) | $ | 5,819.9 | |||||||||||||||||||||||||||||||
Net income | — | — | — | 335.1 | — | — | — | 335.1 | |||||||||||||||||||||||||||||||||||||||
Total other comprehensive loss, net of tax (note 5) | — | — | — | — | — | (51.8) | — | (51.8) | |||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($0.5225 per share) | — | — | — | (178.8) | — | — | — | (178.8) | |||||||||||||||||||||||||||||||||||||||
Cash dividends on preferred stock | — | — | — | (10.5) | — | — | — | (10.5) | |||||||||||||||||||||||||||||||||||||||
Restricted stock and performance-based share awards | — | — | 10.8 | — | — | — | 10.8 | ||||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan common stock committed to be released (note 8) | — | — | — | (0.6) | 5.4 | — | — | 4.8 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased and retired upon vesting of restricted stock awards | — | — | — | (2.4) | — | — | — | (2.4) | |||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | 31.2 | — | — | — | — | 31.2 | |||||||||||||||||||||||||||||||||||||||
Transition adjustments related to adoption of new accounting standards (note 5) | — | — | — | 37.9 | — | (37.3) | — | 0.6 | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | 244.1 | $ | 4.4 | $ | 6,054.3 | $ | 1,220.9 | $ | (131.9) | $ | (270.8) | $ | (1,162.1) | $ | 5,958.9 |
Nine Months Ended September 30, | ||||||||
(in millions) | 2018 | 2017 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 335.1 | $ | 230.9 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization of premises and equipment | 26.8 | 29.3 | ||||||
Expense related to operating leases | 26.6 | 26.3 | ||||||
Provision for loan losses | 20.1 | 18.5 | ||||||
Amortization of other acquisition-related intangible assets | 14.9 | 22.1 | ||||||
Expense related to share-based awards | 14.8 | 13.4 | ||||||
Employee Stock Ownership Plan common stock committed to be released | 4.8 | 4.8 | ||||||
Net security (gains) losses | (0.2 | ) | 15.6 | |||||
Net gains on sales of residential mortgage loans | (0.9 | ) | (2.7 | ) | ||||
Originations of loansheld-for-sale | (126.8 | ) | (212.5 | ) | ||||
Proceeds from sales of loansheld-for-sale | 129.1 | 239.5 | ||||||
Net increase in trading debt securities | — | (1.5 | ) | |||||
Excess income tax benefits from stock option exercises | 1.4 | 1.3 | ||||||
Net changes in other assets and other liabilities | 14.1 | 15.6 | ||||||
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Net cash provided by operating activities | 459.8 | 400.6 | ||||||
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Cash Flows from Investing Activities: | ||||||||
Proceeds from sales of equity securities | 1.9 | — | ||||||
Proceeds from principal repayments and maturities of debt securitiesavailable-for-sale | 346.9 | 456.1 | ||||||
Proceeds from sales of debt securitiesavailable-for-sale | 0.1 | 1,016.2 | ||||||
Proceeds from principal repayments and maturities of debt securitiesheld-to-maturity | 142.1 | 92.1 | ||||||
Purchases of debt securitiesavailable-for-sale | (625.1 | ) | (237.6 | ) | ||||
Purchases of debt securitiesheld-to-maturity | (309.6 | ) | (1,235.9 | ) | ||||
Net redemptions (purchases) of Federal Reserve Bank stock | 7.3 | (19.9 | ) | |||||
Net (purchases) redemptions of Federal Home Loan Bank stock | (7.4 | ) | 17.6 | |||||
Proceeds from sales of loans | 11.9 | 8.4 | ||||||
Loan disbursements, net of principal collections | 423.3 | (325.4 | ) | |||||
Purchases of premises and equipment | (17.3 | ) | (6.7 | ) | ||||
Purchases of leased equipment | (31.3 | ) | (20.5 | ) | ||||
Proceeds from sales of real estate owned | 8.1 | 8.6 | ||||||
Return of premium on bank-owned life insurance, net | 0.8 | 1.7 | ||||||
Net cash (paid) acquired in acquisitions | (35.8 | ) | 28.9 | |||||
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Net cash used in investing activities | (84.1 | ) | (216.4 | ) | ||||
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Cash Flows from Financing Activities: | ||||||||
Net increase in deposits | 153.9 | 834.1 | ||||||
Net decrease in borrowings with terms of three months or less | (252.8 | ) | (279.4 | ) | ||||
Repayments of borrowings with terms of more than three months | (456.6 | ) | (356.1 | ) | ||||
Repayment of notes and debentures | — | (125.0 | ) | |||||
Cash dividends paid on common stock | (178.8 | ) | (169.3 | ) | ||||
Cash dividends paid on preferred stock | (10.5 | ) | (10.5 | ) | ||||
Repurchases of common stock | (2.4 | ) | (3.3 | ) | ||||
Proceeds from stock options exercised | 27.2 | 28.1 | ||||||
Contingent consideration payments | (0.3 | ) | (0.3 | ) | ||||
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Net cash used in financing activities | (720.3 | ) | (81.7 | ) | ||||
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Net (decrease) increase in cash, cash equivalents and restricted cash | (344.6 | ) | 102.5 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 882.6 | 614.1 | ||||||
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Cash, cash equivalents and restricted cash at end of period | $ | 538.0 | $ | 716.6 | ||||
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Supplemental Information: | ||||||||
Interest payments | $ | 214.6 | $ | 138.4 | ||||
Income tax payments | 41.2 | 100.1 | ||||||
Real estate properties acquired by foreclosure | 5.3 | 9.3 | ||||||
Unsettled purchases of securities | 3.8 | 110.5 | ||||||
Assets acquired and liabilities assumed in acquisitions | ||||||||
Non-cash assets, excluding goodwill and other acquisition-related intangibles | 69.1 | 2,642.1 | ||||||
Liabilities | 1.4 | 2,634.1 | ||||||
Common stock issued in Suffolk Bancorp acquisition | — | 484.8 |
Nine Months Ended September 30, | |||||||||||||||||
(in millions) | 2019 | 2018 | |||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||
Net income | $ | 383.0 | $ | 335.1 | |||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
Expense related to operating leases | 29.2 | 26.6 | |||||||||||||||
Depreciation and amortization of premises and equipment | 29.0 | 26.8 | |||||||||||||||
Amortization of other acquisition-related intangible assets | 22.7 | 14.9 | |||||||||||||||
Provision for loan losses | 21.0 | 20.1 | |||||||||||||||
Expense related to share-based awards | 18.5 | 14.8 | |||||||||||||||
Employee Stock Ownership Plan common stock committed to be released | 4.2 | 4.8 | |||||||||||||||
Net security gains | (0.1) | (0.2) | |||||||||||||||
Net gains on sales of residential mortgage loans | (1.5) | (0.9) | |||||||||||||||
Originations of loans held-for-sale | (124.8) | (126.8) | |||||||||||||||
Proceeds from sales of loans held-for-sale | 120.6 | 129.1 | |||||||||||||||
Net increase in trading debt securities | (0.9) | — | |||||||||||||||
Excess income tax benefits from stock option exercises | 0.3 | 1.4 | |||||||||||||||
Net changes in other assets and other liabilities | (494.9) | 14.1 | |||||||||||||||
Net cash provided by operating activities | 6.3 | 459.8 | |||||||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||
Proceeds from sales of equity securities | 0.9 | 1.9 | |||||||||||||||
Proceeds from principal repayments and maturities of debt securities available-for-sale | 350.0 | 346.9 | |||||||||||||||
Proceeds from sales of debt securities available-for-sale | 311.8 | 0.1 | |||||||||||||||
Proceeds from principal repayments and maturities of debt securities held-to-maturity | 121.3 | 142.1 | |||||||||||||||
Purchases of debt securities available-for-sale | (305.1) | (625.1) | |||||||||||||||
Purchases of debt securities held-to-maturity | (153.5) | (309.6) | |||||||||||||||
Net redemptions of Federal Reserve Bank stock | 26.1 | 7.3 | |||||||||||||||
Net purchases of Federal Home Loan Bank stock | (25.0) | (7.4) | |||||||||||||||
Proceeds from sales of loans | 23.6 | 11.9 | |||||||||||||||
Net principal (disbursements) collections of loans | (881.9) | 423.3 | |||||||||||||||
Purchases of loans | (50.7) | — | |||||||||||||||
Purchases of premises and equipment | (19.7) | (17.3) | |||||||||||||||
Purchases of leased equipment, net | (34.6) | (31.3) | |||||||||||||||
Proceeds from sales of real estate owned | 10.4 | 8.1 | |||||||||||||||
Return of premium on bank-owned life insurance, net | 1.2 | 0.8 | |||||||||||||||
Net cash acquired (paid) in acquisitions | 48.7 | (35.8) | |||||||||||||||
Net cash used in investing activities | (576.5) | (84.1) | |||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||
Net increase in deposits | 295.8 | 153.9 | |||||||||||||||
Net increase (decrease) in borrowings with terms of three months or less | 417.5 | (252.8) | |||||||||||||||
Repayments of borrowings with terms of more than three months | (76.8) | (456.6) | |||||||||||||||
Cash dividends paid on common stock | (204.9) | (178.8) | |||||||||||||||
Cash dividends paid on preferred stock | (10.5) | (10.5) | |||||||||||||||
Repurchases of common stock | (1.9) | (2.4) | |||||||||||||||
Proceeds from stock options exercised | 12.9 | 27.2 | |||||||||||||||
Contingent consideration payments | (0.9) | (0.3) | |||||||||||||||
Net cash provided by (used in) financing activities | 431.2 | (720.3) | |||||||||||||||
Net decrease in cash, cash equivalents and restricted cash | (139.0) | (344.6) | |||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 932.0 | 882.6 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 793.0 | $ | 538.0 | |||||||||||||
Supplemental Information: | |||||||||||||||||
Interest payments | $ | 356.6 | $ | 214.6 | |||||||||||||
Income taxes payments | 86.5 | 41.2 | |||||||||||||||
Significant non-cash transactions: | |||||||||||||||||
Right-of-use assets obtained in exchange for lessee operating lease liabilities | 30.3 | — | |||||||||||||||
Real estate properties acquired by foreclosure | 17.1 | 5.3 | |||||||||||||||
Unsettled purchases of securities | 2.1 | 3.8 | |||||||||||||||
Assets acquired and liabilities assumed in acquisitions: | |||||||||||||||||
Non-cash assets, excluding goodwill and other acquisition-related intangibles | 2,893.6 | 69.1 | |||||||||||||||
Liabilities | 2,862.2 | 1.4 | |||||||||||||||
Common stock issued in BSB Bancorp acquisition | 324.3 | — |
NOTE 1. GENERAL
NOTE 1. GENERAL |
Certain information and footnote disclosures normally included
NOTE 2. ACQUISITIONS |
On June 27, 2018,
(in millions) | |||||
Assets: | |||||
Cash and cash equivalents | $ | 108.7 | |||
Securities | 175.8 | ||||
Loans | 2,642.9 | ||||
Goodwill | 144.9 | ||||
Core deposit intangible | 39.5 | ||||
Premises and equipment | 8.3 | ||||
Bank-owned life insurance | 36.8 | ||||
Other assets | 29.8 | ||||
Total assets | $ | 3,186.7 | |||
Liabilities: | |||||
Deposits | $ | 2,118.7 | |||
Borrowings | 696.6 | ||||
Other liabilities | 46.9 | ||||
Total liabilities | $ | 2,862.2 | |||
Total purchase price | $ | 324.5 |
Nine Months Ended September 30, | |||||||||||||||||
(in millions, except per common share data) | 2019 | 2018 | |||||||||||||||
Selected Financial Results: | |||||||||||||||||
Net interest income | $ | 1,044.7 | $ | 949.1 | |||||||||||||
Provision for loan losses | 21.0 | 20.1 | |||||||||||||||
Non-interest income | 308.2 | 281.3 | |||||||||||||||
Non-interest expense | 837.5 | 756.7 | |||||||||||||||
Net income | 395.5 | 355.6 | |||||||||||||||
Net income applicable to common shareholders | 385.0 | 345.1 | |||||||||||||||
Earnings per common share: | |||||||||||||||||
Basic | $ | 0.98 | $ | 0.96 | |||||||||||||
Diluted | 0.98 | 0.95 |
NOTE 2. CASH AND CASH EQUIVALENTS AND SECURITIES
At December 31, 2017, cash and due from banks included restricted cash totaling $13.8 million (none at September 30, 2018) relating to one remaining securitization (which was repaid in June 2018) assumed in the acquisition of LEAF Commercial Capital, Inc. (“LEAF”). 2019.
NOTE 3. CASH AND CASH EQUIVALENTS AND SECURITIES |
As of September 30, 2018 (in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||
U.S. Treasury and agency | $ | 683.5 | $ | — | $ | (31.4 | ) | $ | 652.1 | |||||||
GSE (1) mortgage-backed securities | 2,742.5 | 1.4 | (83.9 | ) | 2,660.0 | |||||||||||
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|
|
|
|
|
|
| |||||||||
Total debt securitiesavailable-for-sale | $ | 3,426.0 | $ | 1.4 | $ | (115.3 | ) | $ | 3,312.1 | |||||||
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|
|
|
| |||||||||
Debt securitiesheld-to-maturity: | ||||||||||||||||
State and municipal | $ | 2,268.2 | $ | 19.7 | $ | (37.4 | ) | $ | 2,250.5 | |||||||
GSE mortgage-backed securities | 1,407.3 | — | (57.7 | ) | 1,349.6 | |||||||||||
Corporate | 65.9 | — | (0.7 | ) | 65.2 | |||||||||||
Other | 1.5 | — | — | 1.5 | ||||||||||||
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|
|
|
|
|
|
| |||||||||
Total debt securitiesheld-to-maturity | $ | 3,742.9 | $ | 19.7 | $ | (95.8 | ) | $ | 3,666.8 | |||||||
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As of December 31, 2017 (in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||
U.S. Treasury and agency | $ | 687.1 | $ | — | $ | (18.3 | ) | $ | 668.8 | |||||||
GSE mortgage-backed securities | 2,477.8 | 7.4 | (28.7 | ) | 2,456.5 | |||||||||||
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|
|
|
|
|
|
| |||||||||
Total debt securitiesavailable-for-sale | $ | 3,164.9 | $ | 7.4 | $ | (47.0 | ) | $ | 3,125.3 | |||||||
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|
| |||||||||
Debt securitiesheld-to-maturity: | ||||||||||||||||
State and municipal | $ | 2,060.4 | $ | 64.5 | $ | (4.6 | ) | $ | 2,120.3 | |||||||
GSE mortgage-backed securities | 1,474.9 | 0.3 | (15.4 | ) | 1,459.8 | |||||||||||
Corporate | 51.3 | 0.8 | — | 52.1 | ||||||||||||
Other | 1.5 | — | — | 1.5 | ||||||||||||
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|
|
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| |||||||||
Total debt securitiesheld-to-maturity | $ | 3,588.1 | $ | 65.6 | $ | (20.0 | ) | $ | 3,633.7 | |||||||
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As of September 30, 2019 (in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
Debt securities available-for-sale: | |||||||||||||||||||||||
U.S. Treasury and agency | $ | 690.6 | $ | 0.4 | $ | (2.9) | $ | 688.1 | |||||||||||||||
GSE (1) mortgage-backed securities | 2,269.7 | 24.3 | (3.4) | 2,290.6 | |||||||||||||||||||
Total debt securities available-for-sale | $ | 2,960.3 | $ | 24.7 | $ | (6.3) | $ | 2,978.7 | |||||||||||||||
Debt securities held-to-maturity: | |||||||||||||||||||||||
State and municipal | $ | 2,432.3 | $ | 148.3 | $ | (0.3) | $ | 2,580.3 | |||||||||||||||
GSE mortgage-backed securities | 1,291.7 | 17.0 | (0.1) | 1,308.6 | |||||||||||||||||||
Corporate | 79.9 | 1.4 | (0.2) | 81.1 | |||||||||||||||||||
Other | 1.5 | — | — | 1.5 | |||||||||||||||||||
Total debt securities held-to-maturity | $ | 3,805.4 | $ | 166.7 | $ | (0.6) | $ | 3,971.5 |
As of December 31, 2018 (in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
Debt securities available-for-sale: | |||||||||||||||||||||||
U.S. Treasury and agency | $ | 699.0 | $ | 0.1 | $ | (21.1) | $ | 678.0 | |||||||||||||||
GSE mortgage-backed securities | 2,486.6 | 4.6 | (48.2) | 2,443.0 | |||||||||||||||||||
Total debt securities available-for-sale | $ | 3,185.6 | $ | 4.7 | $ | (69.3) | $ | 3,121.0 | |||||||||||||||
Debt securities held-to-maturity: | |||||||||||||||||||||||
State and municipal | $ | 2,352.4 | $ | 35.4 | $ | (18.4) | $ | 2,369.4 | |||||||||||||||
GSE mortgage-backed securities | 1,367.5 | — | (33.2) | 1,334.3 | |||||||||||||||||||
Corporate | 70.9 | 0.5 | (0.7) | 70.7 | |||||||||||||||||||
Other | 1.5 | — | — | 1.5 | |||||||||||||||||||
Total debt securities held-to-maturity | $ | 3,792.3 | $ | 35.9 | $ | (52.3) | $ | 3,775.9 |
Available-for-Sale | Held-to-Maturity | |||||||||||||||
(in millions) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
U.S. Treasury and agency: | ||||||||||||||||
Within 1 year | $ | 6.0 | $ | 6.0 | $ | — | $ | — | ||||||||
After 1 but within 5 years | 677.5 | 646.1 | — | — | ||||||||||||
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| |||||||||
Total | 683.5 | 652.1 | — | — | ||||||||||||
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| |||||||||
GSE mortgage-backed securities: | ||||||||||||||||
Within 1 year | — | — | 4.3 | 4.3 | ||||||||||||
After 1 but within 5 years | 53.6 | 52.9 | 234.7 | 226.4 | ||||||||||||
After 5 but within 10 years | 1,014.6 | 1,000.8 | 800.4 | 764.9 | ||||||||||||
After 10 years | 1,674.3 | 1,606.3 | 367.9 | 354.0 | ||||||||||||
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|
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| |||||||||
Total | 2,742.5 | 2,660.0 | 1,407.3 | 1,349.6 | ||||||||||||
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| |||||||||
State and municipal: | ||||||||||||||||
Within 1 year | — | — | 23.5 | 23.5 | ||||||||||||
After 1 but within 5 years | — | — | 180.3 | 183.2 | ||||||||||||
After 5 but within 10 years | — | — | 334.4 | 340.1 | ||||||||||||
After 10 years | — | — | 1,730.0 | 1,703.7 | ||||||||||||
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| |||||||||
Total | — | — | 2,268.2 | 2,250.5 | ||||||||||||
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| |||||||||
Corporate: | ||||||||||||||||
After 1 but within 5 years | — | — | 5.0 | 5.0 | ||||||||||||
After 5 but within 10 years | — | — | 60.9 | 60.2 | ||||||||||||
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|
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| |||||||||
Total | — | — | 65.9 | 65.2 | ||||||||||||
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| |||||||||
Other: | ||||||||||||||||
After 1 but within 5 years | — | — | 1.5 | 1.5 | ||||||||||||
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| |||||||||
Total | — | — | 1.5 | 1.5 | ||||||||||||
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| |||||||||
Total: | ||||||||||||||||
Within 1 year | 6.0 | 6.0 | 27.8 | 27.8 | ||||||||||||
After 1 but within 5 years | 731.1 | 699.0 | 421.5 | 416.1 | ||||||||||||
After 5 but within 10 years | 1,014.6 | 1,000.8 | 1,195.7 | 1,165.2 | ||||||||||||
After 10 years | 1,674.3 | 1,606.3 | 2,097.9 | 2,057.7 | ||||||||||||
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|
|
|
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| |||||||||
Total | $ | 3,426.0 | $ | 3,312.1 | $ | 3,742.9 | $ | 3,666.8 | ||||||||
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Available-for-Sale | Held-to-Maturity | ||||||||||||||||||||||||||||||||||
(in millions) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||||||
U.S. Treasury and agency: | |||||||||||||||||||||||||||||||||||
Within 1 year | $ | 158.9 | $ | 158.9 | $ | — | $ | — | |||||||||||||||||||||||||||
After 1 but within 5 years | 531.7 | 529.2 | — | — | |||||||||||||||||||||||||||||||
Total | 690.6 | 688.1 | — | — | |||||||||||||||||||||||||||||||
GSE mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
Within 1 year | — | — | 2.8 | 2.8 | |||||||||||||||||||||||||||||||
After 1 but within 5 years | 95.4 | 97.7 | 766.4 | 778.9 | |||||||||||||||||||||||||||||||
After 5 but within 10 years | 714.9 | 730.6 | 217.0 | 221.3 | |||||||||||||||||||||||||||||||
After 10 years | 1,459.4 | 1,462.3 | 305.5 | 305.6 | |||||||||||||||||||||||||||||||
Total | 2,269.7 | 2,290.6 | 1,291.7 | 1,308.6 | |||||||||||||||||||||||||||||||
State and municipal: | |||||||||||||||||||||||||||||||||||
Within 1 year | — | — | 12.0 | 12.0 | |||||||||||||||||||||||||||||||
After 1 but within 5 years | — | — | 213.1 | 221.5 | |||||||||||||||||||||||||||||||
After 5 but within 10 years | — | — | 406.0 | 430.7 | |||||||||||||||||||||||||||||||
After 10 years | — | — | 1,801.2 | 1,916.1 | |||||||||||||||||||||||||||||||
Total | — | — | 2,432.3 | 2,580.3 | |||||||||||||||||||||||||||||||
Corporate: | |||||||||||||||||||||||||||||||||||
Within 1 year | — | — | 5.0 | 5.0 | |||||||||||||||||||||||||||||||
After 5 but within 10 years | — | — | 74.9 | 76.1 | |||||||||||||||||||||||||||||||
Total | — | — | 79.9 | 81.1 | |||||||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||||
Within 1 year | — | — | 1.5 | 1.5 | |||||||||||||||||||||||||||||||
Total | — | — | 1.5 | 1.5 | |||||||||||||||||||||||||||||||
Total: | |||||||||||||||||||||||||||||||||||
Within 1 year | 158.9 | 158.9 | 21.3 | 21.3 | |||||||||||||||||||||||||||||||
After 1 but within 5 years | 627.1 | 626.9 | 979.5 | 1,000.4 | |||||||||||||||||||||||||||||||
After 5 but within 10 years | 714.9 | 730.6 | 697.9 | 728.1 | |||||||||||||||||||||||||||||||
After 10 years | 1,459.4 | 1,462.3 | 2,106.7 | 2,221.7 | |||||||||||||||||||||||||||||||
Total | $ | 2,960.3 | $ | 2,978.7 | $ | 3,805.4 | $ | 3,971.5 |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Continuous Unrealized Loss Position | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months Or Longer | Total | ||||||||||||||||||||||
As of September 30, 2018 (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||||||||||
GSE mortgage-backed securities | $ | 893.6 | $ | (14.2 | ) | $ | 1,604.7 | $ | (69.7 | ) | $ | 2,498.3 | $ | (83.9 | ) | |||||||||
U.S. Treasury and agency | 152.5 | (1.8 | ) | 494.6 | (29.6 | ) | 647.1 | (31.4 | ) | |||||||||||||||
Debt securitiesheld-to-maturity: | ||||||||||||||||||||||||
GSE mortgage-backed securities | 330.7 | (11.9 | ) | 1,018.9 | (45.8 | ) | 1,349.6 | (57.7 | ) | |||||||||||||||
State and municipal | 1,048.1 | (21.6 | ) | 265.4 | (15.8 | ) | 1,313.5 | (37.4 | ) | |||||||||||||||
Corporate | 51.4 | (0.7 | ) | — | — | 51.4 | (0.7 | ) | ||||||||||||||||
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| |||||||||||||
Total | $ | 2,476.3 | $ | (50.2 | ) | $ | 3,383.6 | $ | (160.9 | ) | $ | 5,859.9 | $ | (211.1 | ) | |||||||||
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| |||||||||||||
Continuous Unrealized Loss Position | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months Or Longer | Total | ||||||||||||||||||||||
As of December 31, 2017 (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||||||||||
GSE mortgage-backed securities | $ | 1,013.5 | $ | (8.7 | ) | $ | 1,114.8 | $ | (20.0 | ) | $ | 2,128.3 | $ | (28.7 | ) | |||||||||
U.S. Treasury and agency | 156.0 | — | 507.7 | (18.3 | ) | 663.7 | (18.3 | ) | ||||||||||||||||
Debt securitiesheld-to-maturity: | ||||||||||||||||||||||||
GSE mortgage-backed securities | 1,289.3 | (14.7 | ) | 45.0 | (0.7 | ) | 1,334.3 | (15.4 | ) | |||||||||||||||
State and municipal | 106.2 | (0.5 | ) | 224.9 | (4.1 | ) | 331.1 | (4.6 | ) | |||||||||||||||
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|
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| |||||||||||||
Total | $ | 2,565.0 | $ | (23.9 | ) | $ | 1,892.4 | $ | (43.1 | ) | $ | 4,457.4 | $ | (67.0 | ) | |||||||||
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|
Continuous Unrealized Loss Position | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months Or Longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2019 (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE mortgage-backed securities | $ | 201.2 | $ | (0.4) | $ | 700.0 | $ | (3.1) | $ | 901.2 | $ | (3.5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury and agency | 105.3 | (0.2) | 463.1 | (2.6) | 568.4 | (2.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities available-for-sale | $ | 306.5 | $ | (0.6) | $ | 1,163.1 | $ | (5.7) | $ | 1,469.6 | $ | (6.3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE mortgage-backed securities | $ | 110.4 | $ | (0.1) | $ | 9.5 | $ | — | $ | 119.9 | $ | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal | 15.6 | (0.1) | 12.0 | (0.2) | 27.6 | (0.3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate | — | — | 8.4 | (0.2) | 8.4 | (0.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities held-to-maturity | $ | 126.0 | $ | (0.2) | $ | 29.9 | $ | (0.4) | $ | 155.9 | $ | (0.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuous Unrealized Loss Position | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months Or Longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2018 (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE mortgage-backed securities | $ | 132.4 | $ | (0.5) | $ | 1,656.3 | $ | (47.7) | $ | 1,788.7 | $ | (48.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury and agency | — | — | 656.2 | (21.1) | 656.2 | (21.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities available-for-sale | $ | 132.4 | $ | (0.5) | $ | 2,312.5 | $ | (68.8) | $ | 2,444.9 | $ | (69.3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE mortgage-backed securities | $ | — | $ | — | $ | 1,334.3 | $ | (33.2) | $ | 1,334.3 | $ | (33.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal | 113.4 | (0.7) | 697.6 | (17.7) | 811.0 | (18.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate | 31.2 | (0.6) | 2.7 | (0.1) | 33.9 | (0.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities held-to-maturity | $ | 144.6 | $ | (1.3) | $ | 2,034.6 | $ | (51.0) | $ | 2,179.2 | $ | (52.3) |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Financial, Inc.
NOTE 3. LOANS
NOTE 4. LOANS |
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|
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
•Income recognition (including the classification of a loan as‘non-accrual’ ‘non-accrual’ and the treatment of loan origination costs); and
•Recognition of loan charge-offs.
2019.
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
(in millions) | Originated | Acquired | Total | Originated | Acquired | Total | ||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial real estate | $ | 9,750.9 | $ | 844.6 | $ | 10,595.5 | $ | 10,126.6 | $ | 942.1 | $ | 11,068.7 | ||||||||||||
Commercial and industrial | 8,078.9 | 489.7 | 8,568.6 | 8,129.9 | 601.2 | 8,731.1 | ||||||||||||||||||
Equipment financing | 3,734.9 | 474.4 | 4,209.3 | 3,308.5 | 596.9 | 3,905.4 | ||||||||||||||||||
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| |||||||||||||
Total Commercial Portfolio | 21,564.7 | 1,808.7 | 23,373.4 | 21,565.0 | 2,140.2 | 23,705.2 | ||||||||||||||||||
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Retail: | ||||||||||||||||||||||||
Residential mortgage: | ||||||||||||||||||||||||
Adjustable-rate | 5,810.8 | 126.7 | 5,937.5 | 5,782.6 | 144.0 | 5,926.6 | ||||||||||||||||||
Fixed-rate | 867.5 | 106.9 | 974.4 | 758.0 | 121.1 | 879.1 | ||||||||||||||||||
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| |||||||||||||
Total residential mortgage | 6,678.3 | 233.6 | 6,911.9 | 6,540.6 | 265.1 | 6,805.7 | ||||||||||||||||||
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Home equity and other consumer: | ||||||||||||||||||||||||
Home equity | 1,823.6 | 43.6 | 1,867.2 | 1,960.0 | 55.2 | 2,015.2 | ||||||||||||||||||
Other consumer | 44.2 | 2.6 | 46.8 | 45.6 | 3.6 | 49.2 | ||||||||||||||||||
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| |||||||||||||
Total home equity and other consumer | 1,867.8 | 46.2 | 1,914.0 | 2,005.6 | 58.8 | 2,064.4 | ||||||||||||||||||
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| |||||||||||||
Total Retail Portfolio | 8,546.1 | 279.8 | 8,825.9 | 8,546.2 | 323.9 | 8,870.1 | ||||||||||||||||||
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|
|
| |||||||||||||
Total loans | $ | 30,110.8 | $ | 2,088.5 | $ | 32,199.3 | $ | 30,111.2 | $ | 2,464.1 | $ | 32,575.3 | ||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Originated | Acquired | Total | Originated | Acquired | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 9,721.4 | $ | 2,465.5 | $ | 12,186.9 | $ | 9,798.5 | $ | 1,851.1 | $ | 11,649.6 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | 9,720.1 | 825.8 | 10,545.9 | 8,292.3 | 796.6 | 9,088.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment financing | 4,484.5 | 251.1 | 4,735.6 | 3,937.7 | 401.5 | 4,339.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Commercial Portfolio | 23,926.0 | 3,542.4 | 27,468.4 | 22,028.5 | 3,049.2 | 25,077.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustable-rate | 5,547.9 | 1,368.5 | 6,916.4 | 5,854.1 | 807.9 | 6,662.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed-rate | 1,113.8 | 1,278.5 | 2,392.3 | 935.1 | 557.1 | 1,492.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total residential mortgage | 6,661.7 | 2,647.0 | 9,308.7 | 6,789.2 | 1,365.0 | 8,154.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity and other consumer: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity | 1,685.7 | 271.2 | 1,956.9 | 1,789.5 | 173.0 | 1,962.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other consumer | 39.3 | 8.1 | 47.4 | 42.8 | 4.2 | 47.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total home equity and other consumer | 1,725.0 | 279.3 | 2,004.3 | 1,832.3 | 177.2 | 2,009.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Retail Portfolio | 8,386.7 | 2,926.3 | 11,313.0 | 8,621.5 | 1,542.2 | 10,163.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | $ | 32,312.7 | $ | 6,468.7 | $ | 38,781.4 | $ | 30,650.0 | $ | 4,591.4 | $ | 35,241.4 |
Three months ended | Commercial | Retail | ||||||||||||||||||||||||||
September 30, 2018 (in millions) | Originated | Acquired | Total | Originated | Acquired | Total | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 202.0 | $ | 3.8 | $ | 205.8 | $ | 30.8 | $ | 0.2 | $ | 31.0 | $ | 236.8 | ||||||||||||||
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| |||||||||||||||
Charge-offs | (5.7 | ) | (2.0 | ) | (7.7 | ) | (0.7 | ) | — | (0.7 | ) | (8.4 | ) | |||||||||||||||
Recoveries | 0.6 | 0.4 | 1.0 | 0.4 | — | 0.4 | 1.4 | |||||||||||||||||||||
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| |||||||||||||||
Net loan charge-offs | (5.1 | ) | (1.6 | ) | (6.7 | ) | (0.3 | ) | — | (0.3 | ) | (7.0 | ) | |||||||||||||||
Provision for loan losses | 6.3 | 1.7 | 8.0 | 0.2 | — | 0.2 | 8.2 | |||||||||||||||||||||
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Balance at end of period | $ | 203.2 | $ | 3.9 | $ | 207.1 | $ | 30.7 | $ | 0.2 | $ | 30.9 | $ | 238.0 | ||||||||||||||
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Nine months ended | Commercial | Retail | ||||||||||||||||||||||||||
September 30, 2018 (in millions) | Originated | Acquired | Total | Originated | Acquired | Total | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 201.1 | $ | 3.4 | $ | 204.5 | $ | 29.7 | $ | 0.2 | $ | 29.9 | $ | 234.4 | ||||||||||||||
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Charge-offs | (12.9 | ) | (6.3 | ) | (19.2 | ) | (2.6 | ) | — | (2.6 | ) | (21.8 | ) | |||||||||||||||
Recoveries | 2.6 | 1.0 | 3.6 | 1.7 | — | 1.7 | 5.3 | |||||||||||||||||||||
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Net loan charge-offs | (10.3 | ) | (5.3 | ) | (15.6 | ) | (0.9 | ) | — | (0.9 | ) | (16.5 | ) | |||||||||||||||
Provision for loan losses | 12.4 | 5.8 | 18.2 | 1.9 | — | 1.9 | 20.1 | |||||||||||||||||||||
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Balance at end of period | $ | 203.2 | $ | 3.9 | $ | 207.1 | $ | 30.7 | $ | 0.2 | $ | 30.9 | $ | 238.0 | ||||||||||||||
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Three months ended | Commercial | Retail | ||||||||||||||||||||||||||
September 30, 2017 (in millions) | Originated | Acquired | Total | Originated | Acquired | Total | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 198.3 | $ | 3.6 | $ | 201.9 | $ | 29.6 | $ | 0.1 | $ | 29.7 | $ | 231.6 | ||||||||||||||
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| |||||||||||||||
Charge-offs | (4.0 | ) | (1.0 | ) | (5.0 | ) | (1.8 | ) | — | (1.8 | ) | (6.8 | ) | |||||||||||||||
Recoveries | 0.9 | 0.1 | 1.0 | 0.6 | — | 0.6 | 1.6 | |||||||||||||||||||||
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Net loan charge-offs | (3.1 | ) | (0.9 | ) | (4.0 | ) | (1.2 | ) | — | (1.2 | ) | (5.2 | ) | |||||||||||||||
Provision for loan losses | 4.3 | 1.3 | 5.6 | 1.3 | 0.1 | 1.4 | 7.0 | |||||||||||||||||||||
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Balance at end of period | $ | 199.5 | $ | 4.0 | $ | 203.5 | $ | 29.7 | $ | 0.2 | $ | 29.9 | $ | 233.4 | ||||||||||||||
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Nine months ended | Commercial | Retail | ||||||||||||||||||||||||||
September 30, 2017 (in millions) | Originated | Acquired | Total | Originated | Acquired | Total | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 198.8 | $ | 6.1 | $ | 204.9 | $ | 24.2 | $ | 0.2 | $ | 24.4 | $ | 229.3 | ||||||||||||||
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| |||||||||||||||
Charge-offs | (12.0 | ) | (2.9 | ) | (14.9 | ) | (5.1 | ) | — | (5.1 | ) | (20.0 | ) | |||||||||||||||
Recoveries | 3.8 | 0.1 | 3.9 | 1.7 | — | 1.7 | 5.6 | |||||||||||||||||||||
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Net loan charge-offs | (8.2 | ) | (2.8 | ) | (11.0 | ) | (3.4 | ) | — | (3.4 | ) | (14.4 | ) | |||||||||||||||
Provision for loan losses | 8.9 | 0.7 | 9.6 | 8.9 | 8.9 | 18.5 | ||||||||||||||||||||||
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Balance at end of period | $ | 199.5 | $ | 4.0 | $ | 203.5 | $ | 29.7 | $ | 0.2 | $ | 29.9 | $ | 233.4 | ||||||||||||||
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Three months ended Commercial Retail September 30, 2019 (in millions) Originated Acquired Total Originated Acquired Total Total Balance at beginning of period $ 210.9 $ 3.7 $ 214.6 $ 29.2 $ 0.2 $ 29.4 $ 244.0 Charge-offs (6.1) (1.4) (7.5) (0.7) — (0.7) (8.2) Recoveries 1.6 0.3 1.9 0.5 — 0.5 2.4 Net loan charge-offs (4.5) (1.1) (5.6) (0.2) — (0.2) (5.8) Provision for loan losses 6.9 0.9 7.8 — — — 7.8 Balance at end of period $ 213.3 $ 3.5 $ 216.8 $ 29.0 $ 0.2 $ 29.2 $ 246.0 Nine months ended Commercial Retail September 30, 2019 (in millions) Originated Acquired Total Originated Acquired Total Total Balance at beginning of period $ 205.6 $ 3.9 $ 209.5 $ 30.7 $ 0.2 $ 30.9 $ 240.4 Charge-offs (13.9) (6.2) (20.1) (2.9) — (2.9) (23.0) Recoveries 4.2 1.1 5.3 2.3 — 2.3 7.6 Net loan charge-offs (9.7) (5.1) (14.8) (0.6) — (0.6) (15.4) Provision for loan losses 17.4 4.7 22.1 (1.1) — (1.1) 21.0 Balance at end of period $ 213.3 $ 3.5 $ 216.8 $ 29.0 $ 0.2 $ 29.2 $ 246.0 Three months ended Commercial Retail September 30, 2018 (in millions) Originated Acquired Total Originated Acquired Total Total Balance at beginning of period $ 202.0 $ 3.8 $ 205.8 $ 30.8 $ 0.2 $ 31.0 $ 236.8 Charge-offs (5.7) (2.0) (7.7) (0.7) — (0.7) (8.4) Recoveries 0.6 0.4 1.0 0.4 — 0.4 1.4 Net loan charge-offs (5.1) (1.6) (6.7) (0.3) — (0.3) (7.0) Provision for loan losses 6.3 1.7 8.0 0.2 — 0.2 8.2 Balance at end of period $ 203.2 $ 3.9 $ 207.1 $ 30.7 $ 0.2 $ 30.9 $ 238.0 Nine months ended Commercial Retail September 30, 2018 (in millions) Originated Acquired Total Originated Acquired Total Total Balance at beginning of period $ 201.1 $ 3.4 $ 204.5 $ 29.7 $ 0.2 $ 29.9 $ 234.4 Charge-offs (12.9) (6.3) (19.2) (2.6) — (2.6) (21.8) Recoveries 2.6 1.0 3.6 1.7 — 1.7 5.3 Net loan charge-offs (10.3) (5.3) (15.6) (0.9) — (0.9) (16.5) Provision for loan losses 12.4 5.8 18.2 1.9 — 1.9 20.1 Balance at end of period $ 203.2 $ 3.9 $ 207.1 $ 30.7 $ 0.2 $ 30.9 $ 238.0
Commercial | Retail | Total | ||||||||||||||||||||||
As of September 30, 2018 (in millions) | Portfolio | Allowance | Portfolio | Allowance | Portfolio | Allowance | ||||||||||||||||||
Originated loans: | ||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 21,441.6 | $ | 195.2 | $ | 8,458.9 | $ | 28.4 | $ | 29,900.5 | $ | 223.6 | ||||||||||||
Individually evaluated for impairment | 123.1 | 8.0 | 87.2 | 2.3 | 210.3 | 10.3 | ||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||
PCI (1) | 284.3 | 2.2 | 110.3 | 0.1 | 394.6 | 2.3 | ||||||||||||||||||
Purchased performing: | ||||||||||||||||||||||||
Collectively evaluated for impairment | 1,521.2 | 1.7 | 167.9 | — | 1,689.1 | 1.7 | ||||||||||||||||||
Individually evaluated for impairment | 3.2 | — | 1.6 | 0.1 | 4.8 | 0.1 | ||||||||||||||||||
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| |||||||||||||
Total | $ | 23,373.4 | $ | 207.1 | $ | 8,825.9 | $ | 30.9 | $ | 32,199.3 | $ | 238.0 | ||||||||||||
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Commercial | Retail | Total | ||||||||||||||||||||||
As of December 31, 2017 (in millions) | Portfolio | Allowance | Portfolio | Allowance | Portfolio | Allowance | ||||||||||||||||||
Originated loans: | ||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 21,423.8 | $ | 196.5 | $ | 8,454.1 | $ | 27.3 | $ | 29,877.9 | $ | 223.8 | ||||||||||||
Individually evaluated for impairment | 141.2 | 4.6 | 92.1 | 2.4 | 233.3 | 7.0 | ||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||
PCI (1) | 370.4 | 2.8 | 128.1 | 0.2 | 498.5 | 3.0 | ||||||||||||||||||
Purchased performing: | ||||||||||||||||||||||||
Collectively evaluated for impairment | 1,769.8 | 0.6 | 193.9 | — | 1,963.7 | 0.6 | ||||||||||||||||||
Individually evaluated for impairment | — | — | 1.9 | — | 1.9 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 23,705.2 | $ | 204.5 | $ | 8,870.1 | $ | 29.9 | $ | 32,575.3 | $ | 234.4 | ||||||||||||
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People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Commercial Retail Total As of September 30, 2019 (in millions) Portfolio Allowance Portfolio Allowance Portfolio Allowance Originated loans: Collectively evaluated for impairment $ 22,258.6 $ 206.0 $ 9,850.9 $ 26.9 $ 32,109.5 $ 232.9 Individually evaluated for impairment 112.7 7.3 90.6 2.1 203.3 9.4 Acquired loans: PCI (1) 219.0 2.2 72.2 0.2 291.2 2.4 Purchased performing: Collectively evaluated for impairment 4,870.5 1.3 1,292.4 — 6,162.9 1.3 Individually evaluated for impairment 7.6 — 6.9 — 14.5 — Total $ 27,468.4 $ 216.8 $ 11,313.0 $ 29.2 $ 38,781.4 $ 246.0 Commercial Retail Total As of December 31, 2018 (in millions) Portfolio Allowance Portfolio Allowance Portfolio Allowance Originated loans: Collectively evaluated for impairment $ 21,900.1 $ 198.9 $ 8,535.0 $ 28.4 $ 30,435.1 $ 227.3 Individually evaluated for impairment 128.4 6.7 86.5 2.3 214.9 9.0 Acquired loans: PCI (1) 300.3 2.2 99.6 0.1 399.9 2.3 Purchased performing: Collectively evaluated for impairment 2,744.4 1.7 1,439.1 — 4,183.5 1.7 Individually evaluated for impairment 4.5 — 3.5 0.1 8.0 0.1 Total $ 25,077.7 $ 209.5 $ 10,163.7 $ 30.9 $ 35,241.4 $ 240.4
September 30, | December 31, | |||||||
(in millions) | 2018 | 2017 | ||||||
Commercial: | ||||||||
Commercial real estate | $ | 17.2 | $ | 23.7 | ||||
Commercial and industrial | 44.9 | 32.6 | ||||||
Equipment financing | 49.3 | 44.3 | ||||||
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| |||||
Total (1) | 111.4 | 100.6 | ||||||
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| |||||
Retail: | ||||||||
Residential mortgage | 32.0 | 32.7 | ||||||
Home equity | 14.6 | 15.4 | ||||||
Other consumer | 0.1 | — | ||||||
|
|
|
| |||||
Total (2) | 46.7 | 48.1 | ||||||
|
|
|
| |||||
Total | $ | 158.1 | $ | 148.7 | ||||
|
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|
|
|
September 30, 2019 | December 31, 2018 | ||||||||||
(in millions) | |||||||||||
Commercial: | |||||||||||
Commercial real estate | $ | 25.1 | $ | 33.5 | |||||||
Commercial and industrial | 37.7 | 38.0 | |||||||||
Equipment financing | 41.5 | 42.0 | |||||||||
Total (1) | 104.3 | 113.5 | |||||||||
Retail: | |||||||||||
Residential mortgage | 36.6 | 38.9 | |||||||||
Home equity | 14.3 | 15.3 | |||||||||
Other consumer | 0.1 | — | |||||||||
Total (2) | 51.0 | 54.2 | |||||||||
Total | $ | 155.3 | $ | 167.7 |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
2018.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Three Months Ended September 30, 2018 | ||||||||||||
Pre-Modification | Post-Modification | |||||||||||
Outstanding | Outstanding | |||||||||||
Number | Recorded | Recorded | ||||||||||
(dollars in millions) | of Contracts | Investment | Investment | |||||||||
Commercial: | ||||||||||||
Commercial real estate (1) | 4 | $ | 20.7 | $ | 20.7 | |||||||
Commercial and industrial (2) | 10 | 10.3 | 10.3 | |||||||||
Equipment financing (3) | 5 | 10.3 | 10.3 | |||||||||
|
|
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| |||||||
Total | 19 | 41.3 | 41.3 | |||||||||
|
|
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|
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| |||||||
Retail: | ||||||||||||
Residential mortgage (4) | 4 | 1.4 | 1.4 | |||||||||
Home equity (5) | 19 | 2.2 | 2.2 | |||||||||
Other consumer | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 23 | 3.6 | 3.6 | |||||||||
|
|
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| |||||||
Total | 42 | $ | 44.9 | $ | 44.9 | |||||||
|
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|
Three Months Ended September 30, 2019 (dollars in millions) Commercial: Commercial real estate (1) 7 $ 13.1 $ 13.1 Commercial and industrial (2) 8 4.1 4.1 Equipment financing (3) 10 9.5 9.5 Total 25 26.7 26.7 Retail: Residential mortgage (4) 15 6.5 6.5 Home equity (5) 15 1.3 1.3 Other consumer — — — Total 30 7.8 7.8 Total 55 $ 34.5 $ 34.5
Nine Months Ended September 30, 2018 | ||||||||||||
(dollars in millions) | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||
Commercial: | ||||||||||||
Commercial real estate (1) | 9 | $ | 24.3 | $ | 24.3 | |||||||
Commercial and industrial (2) | 34 | 55.2 | 55.2 | |||||||||
Equipment financing (3) | 16 | 20.4 | 20.4 | |||||||||
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| |||||||
Total | 59 | 99.9 | 99.9 | |||||||||
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| |||||||
Retail: | ||||||||||||
Residential mortgage (4) | 16 | 4.9 | 4.9 | |||||||||
Home equity (5) | 56 | 4.9 | 4.9 | |||||||||
Other consumer | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 72 | 9.8 | 9.8 | |||||||||
|
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| |||||||
Total | 131 | $ | 109.7 | $ | 109.7 | |||||||
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Nine Months Ended September 30, 2019 (dollars in millions) Number
of ContractsPre-Modification
Outstanding
Recorded
InvestmentPost-Modification
Outstanding
Recorded
InvestmentCommercial: Commercial real estate (1) 8 $ 13.7 $ 13.7 Commercial and industrial (2) 27 27.5 27.5 Equipment financing (3) 33 22.9 22.9 Total 68 64.1 64.1 Retail: Residential mortgage (4) 73 22.2 22.2 Home equity (5) 83 7.0 7.0 Other consumer — — — Total 156 29.2 29.2 Total 224 $ 93.3 $ 93.3
Three Months Ended September 30, 2017 | ||||||||||||
(dollars in millions) | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||
Commercial: | ||||||||||||
Commercial real estate (1) | 1 | $ | 0.1 | $ | 0.1 | |||||||
Commercial and industrial (2) | 9 | 11.6 | 11.6 | |||||||||
Equipment financing (3) | 13 | 8.1 | 8.1 | |||||||||
|
|
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|
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| |||||||
Total | 23 | 19.8 | 19.8 | |||||||||
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| |||||||
Retail: | ||||||||||||
Residential mortgage (4) | 17 | 3.8 | 3.8 | |||||||||
Home equity (5) | 19 | 1.5 | 1.5 | |||||||||
Other consumer | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 36 | 5.3 | 5.3 | |||||||||
|
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| |||||||
Total | 59 | $ | 25.1 | $ | 25.1 | |||||||
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|
Three Months Ended September 30, 2018 (dollars in millions) Commercial: Commercial real estate (1) 4 $ 20.7 $ 20.7 Commercial and industrial (2) 10 10.3 10.3 Equipment financing (3) 5 10.3 10.3 Total 19 41.3 41.3 Retail: Residential mortgage (4) 4 1.4 1.4 Home equity (5) 19 2.2 2.2 Other consumer — — — Total 23 3.6 3.6 Total 42 $ 44.9 $ 44.9
Nine Months Ended September 30, 2017 | ||||||||||||
(dollars in millions) | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||
Commercial: | ||||||||||||
Commercial real estate (1) | 8 | $ | 5.3 | $ | 5.3 | |||||||
Commercial and industrial (2) | 28 | 39.6 | 39.6 | |||||||||
Equipment financing (3) | 54 | 25.1 | 25.1 | |||||||||
|
|
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| |||||||
Total | 90 | 70.0 | 70.0 | |||||||||
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| |||||||
Retail: | ||||||||||||
Residential mortgage (4) | 45 | 10.8 | 10.8 | |||||||||
Home equity (5) | 65 | 4.5 | 4.5 | |||||||||
Other consumer | — | — | — | |||||||||
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|
| |||||||
Total | 110 | 15.3 | 15.3 | |||||||||
|
|
|
|
|
| |||||||
Total | 200 | $ | 85.3 | $ | 85.3 | |||||||
|
|
| �� |
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018 (dollars in millions) Number
of ContractsPre-Modification
Outstanding
Recorded
InvestmentPost-Modification
Outstanding
Recorded
InvestmentCommercial: Commercial real estate (1) 9 $ 24.3 $ 24.3 Commercial and industrial (2) 34 55.2 55.2 Equipment financing (3) 16 20.4 20.4 Total 59 99.9 99.9 Retail: Residential mortgage (4) 16 4.9 4.9 Home equity (5) 56 4.9 4.9 Other consumer — — — Total 72 9.8 9.8 Total 131 $ 109.7 $ 109.7
Three Months Ended September 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
(dollars in millions) | Number of Contracts | Recorded Investment as of Period End | Number of Contracts | Recorded Investment as of Period End | ||||||||||||
Commercial: | ||||||||||||||||
Commercial real estate | — | $ | — | — | $ | — | ||||||||||
Commercial and industrial | 4 | 5.0 | 1 | 0.1 | ||||||||||||
Equipment financing | 1 | 0.2 | 8 | 4.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 5 | 5.2 | 9 | 4.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Retail: | ||||||||||||||||
Residential mortgage | 5 | 0.9 | 2 | 0.9 | ||||||||||||
Home equity | 8 | 0.6 | 5 | 0.8 | ||||||||||||
Other consumer | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 13 | 1.5 | 7 | 1.7 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 18 | $ | 6.7 | 16 | $ | 6.0 | ||||||||||
|
|
|
|
|
|
|
|
Nine Months Ended September 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
(dollars in millions) | Number of Contracts | Recorded Investment as of Period End | Number of Contracts | Recorded Investment as of Period End | ||||||||||||
Commercial: | ||||||||||||||||
Commercial real estate | 2 | $ | 0.8 | — | $ | — | ||||||||||
Commercial and industrial | 13 | 8.5 | 4 | 1.5 | ||||||||||||
Equipment financing | 7 | 6.8 | 15 | 6.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 22 | 16.1 | 19 | 8.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Retail: | ||||||||||||||||
Residential mortgage | 7 | 1.3 | 9 | 2.7 | ||||||||||||
Home equity | 9 | 0.6 | 11 | 1.3 | ||||||||||||
Other consumer | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 16 | 1.9 | 20 | 4.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 38 | $ | 18.0 | 39 | $ | 12.3 | ||||||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Number of Contracts | Recorded Investment as of Period End | Number of Contracts | Recorded Investment as of Period End | |||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 1 | $ | 0.2 | — | $ | — | |||||||||||||||||||||||||||||||||||
Commercial and industrial | — | — | 4 | 5.0 | |||||||||||||||||||||||||||||||||||||
Equipment financing | 1 | 0.3 | 1 | 0.2 | |||||||||||||||||||||||||||||||||||||
Total | 2 | 0.5 | 5 | 5.2 | |||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 2 | 0.6 | 5 | 0.9 | |||||||||||||||||||||||||||||||||||||
Home equity | 3 | 0.1 | 8 | 0.6 | |||||||||||||||||||||||||||||||||||||
Other consumer | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total | 5 | 0.7 | 13 | 1.5 | |||||||||||||||||||||||||||||||||||||
Total | 7 | $ | 1.2 | 18 | $ | 6.7 |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Number of Contracts | Recorded Investment as of Period End | Number of Contracts | Recorded Investment as of Period End | |||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 1 | $ | 0.2 | 2 | $ | 0.8 | |||||||||||||||||||||||||||||||||||
Commercial and industrial | — | — | 13 | 8.5 | |||||||||||||||||||||||||||||||||||||
Equipment financing | 8 | 8.2 | 7 | 6.8 | |||||||||||||||||||||||||||||||||||||
Total | 9 | 8.4 | 22 | 16.1 | |||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 6 | 2.4 | 7 | 1.3 | |||||||||||||||||||||||||||||||||||||
Home equity | 9 | 0.6 | 9 | 0.6 | |||||||||||||||||||||||||||||||||||||
Other consumer | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total | 15 | 3.0 | 16 | 1.9 | |||||||||||||||||||||||||||||||||||||
Total | 24 | $ | 11.4 | 38 | $ | 18.0 |
As of September 30, 2018 | As of December 31, 2017 | |||||||||||||||||||||||
(in millions) | Unpaid Principal Balance | Recorded Investment | Related Allowance for Loan Losses | Unpaid Principal Balance | Recorded Investment | Related Allowance for Loan Losses | ||||||||||||||||||
Without a related allowance for loan losses: |
| |||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial real estate | $ | 31.2 | $ | 29.2 | $ | — | $ | 37.7 | $ | 36.3 | $ | — | ||||||||||||
Commercial and industrial | 29.3 | 27.1 | — | 27.9 | 25.5 | — | ||||||||||||||||||
Equipment financing | 31.3 | 28.0 | — | 36.9 | 32.8 | — | ||||||||||||||||||
Retail: | ||||||||||||||||||||||||
Residential mortgage | 64.0 | 56.8 | — | 67.6 | 60.8 | — | ||||||||||||||||||
Home equity | 23.5 | 19.9 | — | 24.0 | 20.2 | — | ||||||||||||||||||
Other consumer | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 179.3 | $ | 161.0 | $ | — | $ | 194.1 | $ | 175.6 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
With a related allowance for loan losses: |
| |||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial real estate | $ | 10.3 | $ | 7.4 | $ | 0.8 | $ | 11.7 | $ | 9.9 | $ | 0.9 | ||||||||||||
Commercial and industrial | 25.9 | 22.7 | 4.2 | 26.9 | 26.0 | 2.6 | ||||||||||||||||||
Equipment financing | 12.6 | 11.9 | 3.0 | 11.6 | 10.7 | 1.1 | ||||||||||||||||||
Retail: | ||||||||||||||||||||||||
Residential mortgage | 10.5 | 10.5 | 1.8 | 11.4 | 11.4 | 1.7 | ||||||||||||||||||
Home equity | 1.6 | 1.6 | 0.6 | 1.7 | 1.6 | 0.7 | ||||||||||||||||||
Other consumer | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 60.9 | $ | 54.1 | $ | 10.4 | $ | 63.3 | $ | 59.6 | $ | 7.0 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total impaired loans: | ||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial real estate | $ | 41.5 | $ | 36.6 | $ | 0.8 | $ | 49.4 | $ | 46.2 | $ | 0.9 | ||||||||||||
Commercial and industrial | 55.2 | 49.8 | 4.2 | 54.8 | 51.5 | 2.6 | ||||||||||||||||||
Equipment financing | 43.9 | 39.9 | 3.0 | 48.5 | 43.5 | 1.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 140.6 | 126.3 | 8.0 | 152.7 | 141.2 | 4.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Retail: | ||||||||||||||||||||||||
Residential mortgage | 74.5 | 67.3 | 1.8 | 79.0 | 72.2 | 1.7 | ||||||||||||||||||
Home equity | 25.1 | 21.5 | 0.6 | 25.7 | 21.8 | 0.7 | ||||||||||||||||||
Other consumer | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 99.6 | 88.8 | 2.4 | 104.7 | 94.0 | 2.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 240.2 | $ | 215.1 | $ | 10.4 | $ | 257.4 | $ | 235.2 | $ | 7.0 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019 As of December 31, 2018 (in millions) Without a related allowance for loan losses: Commercial: Commercial real estate $ 38.9 $ 35.7 $ — $ 31.0 $ 28.1 $ — Commercial and industrial 34.9 29.9 — 45.6 42.0 — Equipment financing 21.2 19.2 — 20.2 18.0 — Retail: Residential mortgage 69.1 61.4 — 66.8 59.3 — Home equity 26.5 23.2 — 23.8 20.3 — Other consumer — — — — — — Total $ 190.6 $ 169.4 $ — $ 187.4 $ 167.7 $ — With a related allowance for loan losses: Commercial: Commercial real estate $ 2.6 $ 2.3 $ 0.1 $ 23.8 $ 21.8 $ 1.6 Commercial and industrial 22.4 18.9 5.6 12.6 10.2 2.4 Equipment financing 14.6 14.3 1.6 16.2 12.8 2.7 Retail: Residential mortgage 11.5 11.5 1.5 8.8 8.8 1.7 Home equity 1.4 1.4 0.6 1.7 1.6 0.7 Other consumer — — — — — — Total $ 52.5 $ 48.4 $ 9.4 $ 63.1 $ 55.2 $ 9.1 Total impaired loans: Commercial: Commercial real estate $ 41.5 $ 38.0 $ 0.1 $ 54.8 $ 49.9 $ 1.6 Commercial and industrial 57.3 48.8 5.6 58.2 52.2 2.4 Equipment financing 35.8 33.5 1.6 36.4 30.8 2.7 Total 134.6 120.3 7.3 149.4 132.9 6.7 Retail: Residential mortgage 80.6 72.9 1.5 75.6 68.1 1.7 Home equity 27.9 24.6 0.6 25.5 21.9 0.7 Other consumer — — — — — — Total 108.5 97.5 2.1 101.1 90.0 2.4 Total $ 243.1 $ 217.8 $ 9.4 $ 250.5 $ 222.9 $ 9.1
Three Months Ended September 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
(in millions) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||
Commercial: | ||||||||||||||||
Commercial real estate | $ | 36.2 | $ | 0.4 | $ | 61.8 | $ | 0.3 | ||||||||
Commercial and industrial | 52.4 | 0.2 | 59.7 | 0.7 | ||||||||||||
Equipment financing | 36.0 | 0.1 | 46.5 | 0.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 124.6 | 0.7 | 168.0 | 1.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Retail: | ||||||||||||||||
Residential mortgage | 68.6 | 0.4 | 72.4 | 0.4 | ||||||||||||
Home equity | 20.7 | 0.2 | 21.8 | 0.1 | ||||||||||||
Other consumer | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 89.3 | 0.6 | 94.2 | 0.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 213.9 | $ | 1.3 | $ | 262.2 | $ | 1.7 | ||||||||
|
|
|
|
|
|
|
|
Nine Months Ended September 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
(in millions) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||
Commercial: | ||||||||||||||||
Commercial real estate | $ | 40.7 | $ | 0.9 | $ | 56.9 | $ | 0.9 | ||||||||
Commercial and industrial | 50.6 | 1.3 | 66.1 | 1.6 | ||||||||||||
Equipment financing | 39.8 | 0.2 | 43.0 | 0.4 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 131.1 | 2.4 | 166.0 | 2.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Retail: | ||||||||||||||||
Residential mortgage | 69.5 | 1.3 | 71.9 | 1.3 | ||||||||||||
Home equity | 21.0 | 0.4 | 21.1 | 0.3 | ||||||||||||
Other consumer | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 90.5 | 1.7 | 93.0 | 1.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 221.6 | $ | 4.1 | $ | 259.0 | $ | 4.5 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
(in millions) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 28.8 | $ | 0.4 | $ | 36.2 | $ | 0.4 | |||||||||||||||||||||||||||||||||
Commercial and industrial | 47.6 | 0.3 | 52.4 | 0.2 | |||||||||||||||||||||||||||||||||||||
Equipment financing | 28.5 | 0.1 | 36.0 | 0.1 | |||||||||||||||||||||||||||||||||||||
Total | 104.9 | 0.8 | 124.6 | 0.7 | |||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 70.5 | 0.6 | 68.6 | 0.4 | |||||||||||||||||||||||||||||||||||||
Home equity | 23.9 | 0.2 | 20.7 | 0.2 | |||||||||||||||||||||||||||||||||||||
Other consumer | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total | 94.4 | 0.8 | 89.3 | 0.6 | |||||||||||||||||||||||||||||||||||||
Total | $ | 199.3 | $ | 1.6 | $ | 213.9 | $ | 1.3 |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
(in millions) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 39.9 | $ | 0.8 | $ | 40.7 | $ | 0.9 | |||||||||||||||||||||||||||||||||
Commercial and industrial | 44.3 | 1.4 | 50.6 | 1.3 | |||||||||||||||||||||||||||||||||||||
Equipment financing | 25.5 | 0.2 | 39.8 | 0.2 | |||||||||||||||||||||||||||||||||||||
Total | 109.7 | 2.4 | 131.1 | 2.4 | |||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 67.2 | 1.6 | 69.5 | 1.3 | |||||||||||||||||||||||||||||||||||||
Home equity | 22.7 | 0.5 | 21.0 | 0.4 | |||||||||||||||||||||||||||||||||||||
Other consumer | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total | 89.9 | 2.1 | 90.5 | 1.7 | |||||||||||||||||||||||||||||||||||||
Total | $ | 199.6 | $ | 4.5 | $ | 221.6 | $ | 4.1 |
Past Due | ||||||||||||||||||||
As of September 30, 2018 (in millions) | Current | 30-89 Days | 90 Days or More | Total | Total Originated | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial real estate | $ | 9,728.2 | $ | 10.1 | $ | 12.6 | $ | 22.7 | $ | 9,750.9 | ||||||||||
Commercial and industrial | 8,044.5 | 14.2 | 20.2 | 34.4 | 8,078.9 | |||||||||||||||
Equipment financing | 3,642.4 | 75.6 | 16.9 | 92.5 | 3,734.9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 21,415.1 | 99.9 | 49.7 | 149.6 | 21,564.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retail: | ||||||||||||||||||||
Residential mortgage | 6,625.3 | 31.9 | 21.1 | 53.0 | 6,678.3 | |||||||||||||||
Home equity | 1,810.6 | 6.4 | 6.6 | 13.0 | 1,823.6 | |||||||||||||||
Other consumer | 44.0 | 0.1 | 0.1 | 0.2 | 44.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 8,479.9 | 38.4 | 27.8 | 66.2 | 8,546.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total originated loans | $ | 29,895.0 | $ | 138.3 | $ | 77.5 | $ | 215.8 | $ | 30,110.8 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Past Due | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2019 (in millions) | Current | 30-89 Days | 90 Days or More | Total | Total Originated | ||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 9,695.6 | $ | 5.2 | $ | 20.6 | $ | 25.8 | $ | 9,721.4 | |||||||||||||||||||||||||||||||
Commercial and industrial | 9,696.4 | 9.1 | 14.6 | 23.7 | 9,720.1 | ||||||||||||||||||||||||||||||||||||
Equipment financing | 4,389.0 | 84.2 | 11.3 | 95.5 | 4,484.5 | ||||||||||||||||||||||||||||||||||||
Total | 23,781.0 | 98.5 | 46.5 | 145.0 | 23,926.0 | ||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 6,614.2 | 25.2 | 22.3 | 47.5 | 6,661.7 | ||||||||||||||||||||||||||||||||||||
Home equity | 1,673.2 | 6.3 | 6.2 | 12.5 | 1,685.7 | ||||||||||||||||||||||||||||||||||||
Other consumer | 39.0 | 0.2 | 0.1 | 0.3 | 39.3 | ||||||||||||||||||||||||||||||||||||
Total | 8,326.4 | 31.7 | 28.6 | 60.3 | 8,386.7 | ||||||||||||||||||||||||||||||||||||
Total originated loans | $ | 32,107.4 | $ | 130.2 | $ | 75.1 | $ | 205.3 | $ | 32,312.7 |
Past Due | ||||||||||||||||||||
As of December 31, 2017 (in millions) | Current | 30-89 Days | 90 Days or More | Total | Total Originated | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial real estate | $ | 10,102.3 | $ | 11.0 | $ | 13.3 | $ | 24.3 | $ | 10,126.6 | ||||||||||
Commercial and industrial | 8,099.0 | 14.9 | 16.0 | 30.9 | 8,129.9 | |||||||||||||||
Equipment financing | 3,219.7 | 83.1 | 5.7 | 88.8 | 3,308.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 21,421.0 | 109.0 | 35.0 | 144.0 | 21,565.0 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retail: | ||||||||||||||||||||
Residential mortgage | 6,487.3 | 32.8 | 20.5 | 53.3 | 6,540.6 | |||||||||||||||
Home equity | 1,945.2 | 7.4 | 7.4 | 14.8 | 1,960.0 | |||||||||||||||
Other consumer | 45.3 | 0.3 | — | 0.3 | 45.6 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 8,477.8 | 40.5 | 27.9 | 68.4 | 8,546.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total originated loans | $ | 29,898.8 | $ | 149.5 | $ | 62.9 | $ | 212.4 | $ | 30,111.2 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Past Due | |||||||||||||||||||||||||||||||||||||||||
As of December 31, 2018 (in millions) | Current | 30-89 Days | 90 Days or More | Total | Total Originated | ||||||||||||||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 9,762.1 | $ | 23.0 | $ | 13.4 | $ | 36.4 | $ | 9,798.5 | |||||||||||||||||||||||||||||||
Commercial and industrial | 8,261.5 | 6.9 | 23.9 | 30.8 | 8,292.3 | ||||||||||||||||||||||||||||||||||||
Equipment financing | 3,855.3 | 68.8 | 13.6 | 82.4 | 3,937.7 | ||||||||||||||||||||||||||||||||||||
Total | 21,878.9 | 98.7 | 50.9 | 149.6 | 22,028.5 | ||||||||||||||||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 6,723.2 | 38.6 | 27.4 | 66.0 | 6,789.2 | ||||||||||||||||||||||||||||||||||||
Home equity | 1,776.0 | 5.8 | 7.7 | 13.5 | 1,789.5 | ||||||||||||||||||||||||||||||||||||
Other consumer | 42.7 | 0.1 | — | 0.1 | 42.8 | ||||||||||||||||||||||||||||||||||||
Total | 8,541.9 | 44.5 | 35.1 | 79.6 | 8,621.5 | ||||||||||||||||||||||||||||||||||||
Total originated loans | $ | 30,420.8 | $ | 143.2 | $ | 86.0 | $ | 229.2 | $ | 30,650.0 |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
The following is a summary, by class
People’s United Financial, Inc.
As of September 30, 2018 (in millions) | Residential Mortgage | Home Equity | Other Consumer | Total | ||||||||||||
Retail: | ||||||||||||||||
Originated loans: | ||||||||||||||||
Low risk | $ | 3,343.1 | $ | 862.0 | $ | 28.2 | $ | 4,233.3 | ||||||||
Moderate risk | 2,829.0 | 589.6 | 6.6 | 3,425.2 | ||||||||||||
High risk | 506.2 | 372.0 | 9.4 | 887.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total originated loans | 6,678.3 | 1,823.6 | 44.2 | 8,546.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Acquired loans: | ||||||||||||||||
Low risk | 136.6 | — | — | 136.6 | ||||||||||||
Moderate risk | 52.3 | — | — | 52.3 | ||||||||||||
High risk | 44.7 | 43.6 | 2.6 | 90.9 | ||||||||||||
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|
|
|
|
|
|
| |||||||||
Total acquired loans | 233.6 | 43.6 | 2.6 | 279.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 6,911.9 | $ | 1,867.2 | $ | 46.8 | $ | 8,825.9 | ||||||||
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|
|
|
|
|
|
| |||||||||
As of December 31, 2017 (in millions) | Commercial Real Estate | Commercial and Industrial | Equipment Financing | Total | ||||||||||||
Commercial: | ||||||||||||||||
Originated loans: | ||||||||||||||||
Pass | $ | 9,859.3 | $ | 7,760.7 | $ | 2,899.9 | $ | 20,519.9 | ||||||||
Special mention | 159.4 | 124.0 | 91.8 | 375.2 | ||||||||||||
Substandard | 107.0 | 244.2 | 316.8 | 668.0 | ||||||||||||
Doubtful | 0.9 | 1.0 | — | 1.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total originated loans | 10,126.6 | 8,129.9 | 3,308.5 | 21,565.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Acquired loans: | ||||||||||||||||
Pass | 892.0 | 520.0 | 596.9 | 2,008.9 | ||||||||||||
Special mention | 14.8 | 15.2 | — | 30.0 | ||||||||||||
Substandard | 35.3 | 66.0 | — | 101.3 | ||||||||||||
Doubtful | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total acquired loans | 942.1 | 601.2 | 596.9 | 2,140.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 11,068.7 | $ | 8,731.1 | $ | 3,905.4 | $ | 23,705.2 | ||||||||
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2017 (in millions) | Residential Mortgage | Home Equity | Other Consumer | Total | ||||||||||||
Retail: | ||||||||||||||||
Originated loans: | ||||||||||||||||
Low risk | $ | 3,292.1 | $ | 925.6 | $ | 28.2 | $ | 4,245.9 | ||||||||
Moderate risk | 2,738.8 | 640.0 | 7.1 | 3,385.9 | ||||||||||||
High risk | 509.7 | 394.4 | 10.3 | 914.4 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total originated loans | 6,540.6 | 1,960.0 | 45.6 | 8,546.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Acquired loans: | ||||||||||||||||
Low risk | 148.0 | — | — | 148.0 | ||||||||||||
Moderate risk | 65.7 | — | — | 65.7 | ||||||||||||
High risk | 51.4 | 55.2 | 3.6 | 110.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total acquired loans | 265.1 | 55.2 | 3.6 | 323.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 6,805.7 | $ | 2,015.2 | $ | 49.2 | $ | 8,870.1 | ||||||||
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|
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|
|
|
|
|
The following tables summarize, by class of loan, credit quality indicators:
As of September 30, 2019 (in millions) | Commercial Real Estate | Commercial and Industrial | Equipment Financing | Total | |||||||||||||||||||
Commercial: | |||||||||||||||||||||||
Originated loans: | |||||||||||||||||||||||
Pass | $ | 9,448.6 | $ | 9,178.2 | $ | 4,056.4 | $ | 22,683.2 | |||||||||||||||
Special mention | 194.3 | 270.4 | 82.5 | 547.2 | |||||||||||||||||||
Substandard | 77.6 | 271.2 | 345.6 | 694.4 | |||||||||||||||||||
Doubtful | 0.9 | 0.3 | — | 1.2 | |||||||||||||||||||
Total originated loans | 9,721.4 | 9,720.1 | 4,484.5 | 23,926.0 | |||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||
Pass | 2,382.2 | 764.7 | 248.6 | 3,395.5 | |||||||||||||||||||
Special mention | 38.1 | 17.7 | — | 55.8 | |||||||||||||||||||
Substandard | 45.2 | 43.3 | 2.5 | 91.0 | |||||||||||||||||||
Doubtful | — | 0.1 | — | 0.1 | |||||||||||||||||||
Total acquired loans | 2,465.5 | 825.8 | 251.1 | 3,542.4 | |||||||||||||||||||
Total | $ | 12,186.9 | $ | 10,545.9 | $ | 4,735.6 | $ | 27,468.4 |
As of September 30, 2019 (in millions) | Residential Mortgage | Home Equity | Other Consumer | Total | |||||||||||||||||||
Retail: | |||||||||||||||||||||||
Originated loans: | |||||||||||||||||||||||
Low risk | $ | 3,362.7 | $ | 785.9 | $ | 24.0 | $ | 4,172.6 | |||||||||||||||
Moderate risk | 2,763.9 | 555.6 | 5.7 | 3,325.2 | |||||||||||||||||||
High risk | 535.1 | 344.2 | 9.6 | 888.9 | |||||||||||||||||||
Total originated loans | 6,661.7 | 1,685.7 | 39.3 | 8,386.7 | |||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||
Low risk | 1,228.9 | — | — | 1,228.9 | |||||||||||||||||||
Moderate risk | 1,166.7 | — | — | 1,166.7 | |||||||||||||||||||
High risk | 251.4 | 271.2 | 8.1 | 530.7 | |||||||||||||||||||
Total acquired loans | 2,647.0 | 271.2 | 8.1 | 2,926.3 | |||||||||||||||||||
Total | $ | 9,308.7 | $ | 1,956.9 | $ | 47.4 | $ | 11,313.0 |
As of December 31, 2018 (in millions) | Commercial Real Estate | Commercial and Industrial | Equipment Financing | Total | |||||||||||||||||||
Commercial: | |||||||||||||||||||||||
Originated loans: | |||||||||||||||||||||||
Pass | $ | 9,607.0 | $ | 7,855.7 | $ | 3,549.3 | $ | 21,012.0 | |||||||||||||||
Special mention | 105.5 | 196.9 | 92.1 | 394.5 | |||||||||||||||||||
Substandard | 85.2 | 239.3 | 296.3 | 620.8 | |||||||||||||||||||
Doubtful | 0.8 | 0.4 | — | 1.2 | |||||||||||||||||||
Total originated loans | 9,798.5 | 8,292.3 | 3,937.7 | 22,028.5 | |||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||
Pass | 1,766.2 | 719.6 | 394.0 | 2,879.8 | |||||||||||||||||||
Special mention | 27.3 | 14.6 | 4.7 | 46.6 | |||||||||||||||||||
Substandard | 57.6 | 62.4 | 2.8 | 122.8 | |||||||||||||||||||
Doubtful | — | — | — | — | |||||||||||||||||||
Total acquired loans | 1,851.1 | 796.6 | 401.5 | 3,049.2 | |||||||||||||||||||
Total | $ | 11,649.6 | $ | 9,088.9 | $ | 4,339.2 | $ | 25,077.7 | |||||||||||||||
As of December 31, 2018 (in millions) | Residential Mortgage | Home Equity | Other Consumer | Total | |||||||||||||||||||
Retail: | |||||||||||||||||||||||
Originated loans: | |||||||||||||||||||||||
Low risk | $ | 2,912.8 | $ | 834.5 | $ | 27.3 | $ | 3,774.6 | |||||||||||||||
Moderate risk | 3,360.9 | 576.4 | 5.9 | 3,943.2 | |||||||||||||||||||
High risk | 515.5 | 378.6 | 9.6 | 903.7 | |||||||||||||||||||
Total originated loans | 6,789.2 | 1,789.5 | 42.8 | 8,621.5 | |||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||
Low risk | 506.1 | — | — | 506.1 | |||||||||||||||||||
Moderate risk | 639.6 | — | — | 639.6 | |||||||||||||||||||
High risk | 219.3 | 173.0 | 4.2 | 396.5 | |||||||||||||||||||
Total acquired loans | 1,365.0 | 173.0 | 4.2 | 1,542.2 | |||||||||||||||||||
Total | $ | 8,154.2 | $ | 1,962.5 | $ | 47.0 | $ | 10,163.7 |
•Changes in the expected principal and interest payments over the estimated life – Updates |
|
|
People’s United Financial, Inc.
Notes to Consolidated Financial Statementschanges in expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows resulting from loan modifications are included in the assessment of expected cash flows;
Prepayments affect the estimated life of the loans which may change the amount of interest income, and possibly principal, expected to be collected; and
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance at beginning of period | $ | 190.2 | $ | 233.4 | $ | 219.7 | $ | 255.4 | ||||||||
Acquisitions | — | — | — | 13.1 | ||||||||||||
Accretion | (5.6 | ) | (7.1 | ) | (17.9 | ) | (22.5 | ) | ||||||||
Reclassification from nonaccretable difference for loans | — | — | — | — | ||||||||||||
Other changes in expected cash flows (2) | — | — | (17.2 | ) | (19.7 | ) | ||||||||||
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| |||||||||
Balance at end of period | $ | 184.6 | $ | 226.3 | $ | 184.6 | $ | 226.3 | ||||||||
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|
1.Results in increased interest accretion as a prospective yield adjustment over the remaining life of the corresponding pool of loans. 2.Represents changes in cash flows expected |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
be collected due to factors other than credit (e.g. changes in prepayment assumptions and/or changes in interest rates on variable rate loans), as well as loan sales, modifications and payoffs.
NOTE 4. STOCKHOLDERS’ EQUITY
NOTE 5. STOCKHOLDERS' EQUITY |
In June 2019, the Company’s Board of Directors authorized the repurchase of up to 20.0 million shares of People’s United’s common stock. Such shares may be repurchased, either directly or through agents, in the open market at prices and terms satisfactory to management. To date, 0 shares have been repurchased.
(in millions) | Pension and Other Postretirement Plans | Net Unrealized Gains (Losses) on Debt Securities Available-for-Sale | Net Unrealized Gains (Losses) on Debt Securities Transferred to Held-to-Maturity | Net Unrealized Gains (Losses) on Derivatives Accounted for as Cash Flow Hedges | Total AOCL | |||||||||||||||
Balance at December 31, 2017 | $ | (144.1 | ) | $ | (21.6 | ) | $ | (15.1 | ) | $ | (0.9 | ) | $ | (181.7 | ) | |||||
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| |||||||||||
Other comprehensive income (loss) before reclassifications | — | (56.2 | ) | — | (2.4 | ) | (58.6 | ) | ||||||||||||
Amounts reclassified from AOCL (1) | 4.5 | (0.1 | ) | 2.3 | 0.1 | 6.8 | ||||||||||||||
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| |||||||||||
Current period other comprehensive | 4.5 | (56.3 | ) | 2.3 | (2.3 | ) | (51.8 | ) | ||||||||||||
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| |||||||||||
Transition adjustments related to adoption of new accounting standards (2) | (30.0 | ) | (3.9 | ) | (3.2 | ) | (0.2 | ) | (37.3 | ) | ||||||||||
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|
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|
|
|
| |||||||||||
Balance at September 30, 2018 | $ | (169.6 | ) | $ | (81.8 | ) | $ | (16.0 | ) | $ | (3.4 | ) | $ | (270.8 | ) | |||||
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(in millions) | Pension and Other Postretirement Plans | Net Unrealized Gains (Losses) on Debt Securities Available-for-Sale | Net Unrealized Gains (Losses) on Debt Securities Transferred to Held-to-Maturity | Net Unrealized Gains (Losses) on Derivatives Accounted for as Cash Flow Hedges | Total AOCL | |||||||||||||||
Balance at December 31, 2016 | $ | (145.6 | ) | $ | (32.3 | ) | $ | (17.4 | ) | $ | 0.3 | $ | (195.0 | ) | ||||||
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| |||||||||||
Other comprehensive income before reclassifications | — | 11.1 | — | 0.3 | 11.4 | |||||||||||||||
Amounts reclassified from AOCL (1) | 2.8 | 9.9 | 1.6 | (0.4 | ) | 13.9 | ||||||||||||||
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| |||||||||||
Current period other comprehensive | 2.8 | 21.0 | 1.6 | (0.1 | ) | 25.3 | ||||||||||||||
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| |||||||||||
Balance at September 30, 2017 | $ | (142.8 | ) | $ | (11.3 | ) | $ | (15.8 | ) | $ | 0.2 | $ | (169.7 | ) | ||||||
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(in millions) Balance at December 31, 2018 $ (192.5) $ (47.0) $ (15.3) $ (2.0) $ (256.8) Other comprehensive income
before reclassifications— 66.2 — 1.6 67.8 Amounts reclassified from AOCL (1) 3.9 — 2.0 0.8 6.7 Current period other comprehensive
income3.9 66.2 2.0 2.4 74.5 Balance at September 30, 2019 $ (188.6) $ 19.2 $ (13.3) $ 0.4 $ (182.3)
(in millions) | Pension and Other Postretirement Plans | Net Unrealized Gains (Losses) on Debt Securities Available-for-Sale | Net Unrealized Gains (Losses) on Debt Securities Transferred to Held-to-Maturity | Net Unrealized Gains (Losses) on Derivatives Accounted for as Cash Flow Hedges | Total AOCL | ||||||||||||||||||||||||
Balance at December 31, 2017 | $ | (144.1) | $ | (21.6) | $ | (15.1) | $ | (0.9) | $ | (181.7) | |||||||||||||||||||
Other comprehensive income before reclassifications | — | (56.2) | — | (2.4) | (58.6) | ||||||||||||||||||||||||
Amounts reclassified from AOCL (1) | 4.5 | (0.1) | 2.3 | 0.1 | 6.8 | ||||||||||||||||||||||||
Current period other comprehensive income (loss) | 4.5 | (56.3) | 2.3 | (2.3) | (51.8) | ||||||||||||||||||||||||
Transition adjustments related to adoption of new accounting standards (2) | (30.0) | (3.9) | (3.2) | (0.2) | (37.3) | ||||||||||||||||||||||||
Balance at September 30, 2018 | $ | (169.6) | $ | (81.8) | $ | (16.0) | $ | (3.4) | $ | (270.8) |
Amounts Reclassified from AOCL | Affected Line Item in the Statement Where Net Income is Presented | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
Details about components of AOCL: | ||||||||||||||||||
Amortization of pension and other postretirement plans items: | ||||||||||||||||||
Net actuarial loss | $ | (2.0 | ) | $ | (1.7 | ) | $ | (6.2 | ) | $ | (5.1 | ) | (1) | |||||
Prior service credit | — | 0.2 | 0.2 | 0.6 | (1) | |||||||||||||
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(2.0 | ) | (1.5 | ) | (6.0 | ) | (4.5 | ) | Income before income tax expense | ||||||||||
0.5 | 0.6 | 1.5 | 1.7 | Income tax expense | ||||||||||||||
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(1.5 | ) | (0.9 | ) | (4.5 | ) | (2.8 | ) | Net income | ||||||||||
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Reclassification adjustment for net realized gains (losses) on debt securitiesavailable-for-sale | — | — | 0.1 | (15.6 | ) | Income before income tax expense (2) | ||||||||||||
— | — | — | 5.7 | Income tax expense | ||||||||||||||
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— | — | 0.1 | (9.9 | ) | Net income | |||||||||||||
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Amortization of unrealized losses on debt securities transferred toheld-to-maturity | (0.9 | ) | (0.9 | ) | (3.0 | ) | (2.6 | ) | Income before income tax expense (3) | |||||||||
0.2 | 0.3 | 0.7 | 1.0 | Income tax expense | ||||||||||||||
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(0.7 | ) | (0.6 | ) | (2.3 | ) | (1.6 | ) | Net income | ||||||||||
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Amortization of unrealized gains and losses on cash flow hedges: | ||||||||||||||||||
Interest rate swaps | (0.3 | ) | 0.3 | (0.3 | ) | 0.6 | (4) | |||||||||||
Interest rate locks | 0.1 | 0.1 | 0.1 | 0.1 | (4) | |||||||||||||
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(0.2 | ) | 0.4 | (0.2 | ) | 0.7 | Income before income tax expense | ||||||||||||
0.1 | (0.2 | ) | 0.1 | (0.3 | ) | Income tax expense | ||||||||||||
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(0.1 | ) | 0.2 | (0.1 | ) | 0.4 | Net income | ||||||||||||
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Total reclassifications for the period | $ | (2.3 | ) | $ | (1.3 | ) | $ | (6.8 | ) | $ | (13.9 | ) | ||||||
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Amounts Reclassified from AOCL Three Months Ended
September 30,Nine Months Ended
September 30,(in millions) 2019 2018 2019 2018 Details about components of AOCL: Amortization of pension and other postretirement plans items: Net actuarial loss $ (1.4) $ (2.0) $ (4.1) $ (6.2) (1) Prior service credit — — — 0.2 (1) (1.4) (2.0) (4.1) (6.0) Income before income tax expense 0.4 0.5 0.2 1.5 Income tax expense (1.0) (1.5) (3.9) (4.5) Net income Reclassification adjustment for net realized gains (losses) on debt securities available-for-sale — — — 0.1 Income before income tax expense (2) — — — — Income tax expense — — — 0.1 Net income (1.1) (0.9) (2.7) (3.0) Income before income tax expense (3) 0.3 0.2 0.7 0.7 Income tax expense (0.8) (0.7) (2.0) (2.3) Net income Amortization of unrealized gains and losses on cash flow hedges: Interest rate swaps (0.3) (0.3) (1.1) (0.3) (4) Interest rate locks 0.1 0.1 0.1 0.1 (4) (0.2) (0.2) (1.0) (0.2) Income before income tax expense — 0.1 0.2 0.1 Income tax expense (0.2) (0.1) (0.8) (0.1) Net income Total reclassifications for the period $ (2.0) $ (2.3) $ (6.7) $ (6.8)
NOTE 5. EARNINGS PER COMMON SHARE
NOTE 6. EARNINGS PER COMMON SHARE |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions, except per common share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income available to common shareholders | $ | 113.5 | $ | 87.3 | $ | 324.6 | $ | 220.4 | ||||||||
Dividends paid on and undistributed earnings allocated to participating securities | — | (0.1 | ) | (0.2 | ) | (0.4 | ) | |||||||||
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Earnings attributable to common shareholders | $ | 113.5 | $ | 87.2 | $ | 324.4 | $ | 220.0 | ||||||||
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Weighted average common shares outstanding for basic EPS | 341.4 | 336.9 | 340.6 | 327.6 | ||||||||||||
Effect of dilutive equity-based awards | 3.6 | 1.9 | 3.9 | 2.0 | ||||||||||||
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Weighted average common shares and common-equivalent shares for diluted EPS | 345.0 | 338.8 | 344.5 | 329.6 | ||||||||||||
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EPS: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.26 | $ | 0.95 | $ | 0.67 | ||||||||
Diluted | 0.33 | 0.26 | 0.94 | 0.67 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions, except per common share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 131.6 | $ | 113.5 | $ | 372.5 | $ | 324.6 | |||||||||||||||||||||||||||
Dividends paid on and undistributed earnings allocated to participating securities | (0.1) | — | (0.2) | (0.2) | |||||||||||||||||||||||||||||||
Earnings attributable to common shareholders | $ | 131.5 | $ | 113.5 | $ | 372.3 | $ | 324.4 | |||||||||||||||||||||||||||
Weighted average common shares outstanding for basic EPS | 391.7 | 341.4 | 384.6 | 340.6 | |||||||||||||||||||||||||||||||
Effect of dilutive equity-based awards | 2.8 | 3.6 | 3.2 | 3.9 | |||||||||||||||||||||||||||||||
Weighted average common shares and common-equivalent shares for diluted EPS | 394.5 | 345.0 | 387.8 | 344.5 | |||||||||||||||||||||||||||||||
EPS: | |||||||||||||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.33 | $ | 0.97 | $ | 0.95 | |||||||||||||||||||||||||||
Diluted | 0.33 | 0.33 | 0.96 | 0.94 |
NOTE 6. GOODWILL AND OTHER ACQUISITION-RELATED INTANGIBLE ASSETS
NOTE 7. GOODWILL AND OTHER ACQUISITION-RELATED INTANGIBLE ASSETS |
Operating Segment | ||||||||||||||||
(in millions) | Commercial Banking | Retail Banking | Wealth Management | Total | ||||||||||||
Balance at December 31, 2017 | $ | 1,600.3 | $ | 720.1 | $ | 91.0 | $ | 2,411.4 | ||||||||
Acquisition of Vend Lease | 23.8 | — | — | 23.8 | ||||||||||||
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|
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|
|
| |||||||||
Balance at September 30, 2018 | $ | 1,624.1 | $ | 720.1 | $ | 91.0 | $ | 2,435.2 | ||||||||
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|
|
|
|
Operating Segment | ||||||||||||||||
(in millions) | Commercial Banking | Retail Banking | Wealth Management | Total | ||||||||||||
Balance at December 31, 2016 | $ | 1,222.1 | $ | 679.6 | $ | 91.0 | $ | 1,992.7 | ||||||||
Acquisition of: | ||||||||||||||||
Suffolk Bancorp | 229.8 | 40.5 | — | 270.3 | ||||||||||||
LEAF | 148.4 | — | — | 148.4 | ||||||||||||
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| |||||||||
Balance at September 30, 2017 | $ | 1,600.3 | $ | 720.1 | $ | 91.0 | $ | 2,411.4 | ||||||||
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|
|
|
|
|
respectively.
Operating Segment | |||||||||||||||||||||||||||||||||||
(in millions) | Commercial Banking | Retail Banking | Wealth Management | Total | |||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 1,759.4 | $ | 835.3 | $ | 91.0 | $ | 2,685.7 | |||||||||||||||||||||||||||
Acquisition of: | |||||||||||||||||||||||||||||||||||
VAR | 37.5 | — | — | 37.5 | |||||||||||||||||||||||||||||||
BSB Bancorp | 49.3 | 95.6 | — | 144.9 | |||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | 1,846.2 | $ | 930.9 | $ | 91.0 | $ | 2,868.1 | |||||||||||||||||||||||||||
Operating Segment | |||||||||||||||||||||||||||||||||||
(in millions) | Commercial Banking | Retail Banking | Wealth Management | Total | |||||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 1,600.3 | $ | 720.1 | $ | 91.0 | $ | 2,411.4 | |||||||||||||||||||||||||||
Acquisition of Vend Lease Company | 23.8 | — | — | 23.8 | |||||||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | 1,624.1 | $ | 720.1 | $ | 91.0 | $ | 2,435.2 |
NOTE 7. EMPLOYEE BENEFIT PLANS
NOTE 8. EMPLOYEE BENEFIT PLANS |
People’s United also continues to maintain a qualified defined benefit pension plan that covers former Suffolk Bancorp employees who meet certain eligibility requirements (the “Suffolk Qualified Plan”). Effective December 31, 2012, accrued benefits were frozen based on participants’ then-current service and pay levels. Interest continues to be credited on undistributed balances at a crediting rate specified by the Suffolk Qualified Plan.
effective February 28, 2013.
Pension Plans | Other Postretirement Plan | |||||||||||||||
Three months ended September 30 (in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net periodic benefit (income) expense: | ||||||||||||||||
Interest cost | $ | 4.9 | $ | 4.9 | $ | 0.2 | $ | 0.2 | ||||||||
Expected return on plan assets | (10.9 | ) | (9.6 | ) | — | — | ||||||||||
Recognized net actuarial loss | 2.0 | 1.6 | — | 0.1 | ||||||||||||
Recognized prior service credit | — | (0.2 | ) | — | — | |||||||||||
Settlements | (0.5 | ) | 1.1 | — | — | |||||||||||
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| |||||||||
Net periodic benefit (income) expense (1) | $ | (4.5 | ) | $ | (2.2 | ) | $ | 0.2 | $ | 0.3 | ||||||
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Pension Plans | Other Postretirement Plan | |||||||||||||||
Nine months ended September 30 (in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net periodic benefit (income) expense: | ||||||||||||||||
Interest cost | $ | 14.6 | $ | 14.3 | $ | 0.6 | $ | 0.6 | ||||||||
Expected return on plan assets | (32.7 | ) | (28.3 | ) | — | — | ||||||||||
Recognized net actuarial loss | 6.0 | 4.9 | 0.2 | 0.2 | ||||||||||||
Recognized prior service credit | (0.2 | ) | (0.6 | ) | — | — | ||||||||||
Settlements | 0.4 | 2.6 | — | — | ||||||||||||
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| |||||||||
Net periodic benefit (income) expense (1) | (11.9 | ) | (7.1 | ) | 0.8 | 0.8 | ||||||||||
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| |||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | ||||||||||||||||
Net actuarial loss | (6.0 | ) | (4.9 | ) | (0.2 | ) | (0.2 | ) | ||||||||
Prior service credit | 0.2 | 0.6 | — | — | ||||||||||||
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| |||||||||
Totalpre-tax changes recognized in other comprehensive income (loss) | (5.8 | ) | (4.3 | ) | (0.2 | ) | (0.2 | ) | ||||||||
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Total recognized in net periodic benefit (income) expense and other comprehensive income (loss) | $ | (17.7 | ) | $ | (11.4 | ) | $ | 0.6 | $ | 0.6 | ||||||
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People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Pension Plans | Other Postretirement Plan | ||||||||||||||||||||||||||||||||||
Three months ended September 30 (in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net periodic benefit (income) expense: | |||||||||||||||||||||||||||||||||||
Interest cost | $ | 5.7 | $ | 4.9 | $ | 0.2 | $ | 0.2 | |||||||||||||||||||||||||||
Expected return on plan assets | (11.4) | (10.9) | — | — | |||||||||||||||||||||||||||||||
Recognized net actuarial loss | 1.3 | 2.0 | 0.1 | — | |||||||||||||||||||||||||||||||
Recognized prior service credit | — | — | — | — | |||||||||||||||||||||||||||||||
Settlements | 0.4 | (0.5) | — | — | |||||||||||||||||||||||||||||||
Net periodic benefit (income) expense (1) | $ | (4.0) | $ | (4.5) | $ | 0.3 | $ | 0.2 | |||||||||||||||||||||||||||
Pension Plans | Other Postretirement Plans | ||||||||||||||||||||||||||||||||||
Nine months ended September 30 (in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net periodic benefit (income) expense: | |||||||||||||||||||||||||||||||||||
Interest cost | $ | 17.1 | $ | 14.6 | $ | 0.7 | $ | 0.6 | |||||||||||||||||||||||||||
Expected return on plan assets | (34.3) | (32.7) | — | — | |||||||||||||||||||||||||||||||
Recognized net actuarial loss | 4.0 | 6.0 | 0.1 | 0.2 | |||||||||||||||||||||||||||||||
Recognized prior service credit | — | (0.2) | — | — | |||||||||||||||||||||||||||||||
Settlements | 1.3 | 0.4 | — | — | |||||||||||||||||||||||||||||||
Net periodic benefit (income) expense | (11.9) | (11.9) | 0.8 | 0.8 | |||||||||||||||||||||||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
Net actuarial loss | (4.0) | (6.0) | (0.1) | (0.2) | |||||||||||||||||||||||||||||||
Prior service credit | — | 0.2 | — | — | |||||||||||||||||||||||||||||||
Total pre-tax changes recognized in other comprehensive income (loss) | (4.0) | (5.8) | (0.1) | (0.2) | |||||||||||||||||||||||||||||||
Total recognized in net periodic benefit (income) expense and other comprehensive income (loss) | $ | (15.9) | $ | (17.7) | $ | 0.7 | $ | 0.6 |
NOTE 8. LEGAL PROCEEDINGS
respectively.
NOTE 9. LEGAL PROCEEDINGS |
NOTE 9. SEGMENT INFORMATION
NOTE 10. SEGMENT INFORMATION |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
NOTE 10. FAIR VALUE MEASUREMENTS
NOTE 11. FAIR VALUE MEASUREMENTS |
▪quoted prices for similar assets or liabilities in active markets (such as U.S. agency and GSE mortgage-backed securities);
▪quoted prices for identical or similar assets or liabilities in less active markets (such as certain U.S. and government agency debt securities, and corporate and municipal debt securities that trade infrequently); and
▪other inputs that (i) are observable for substantially the full term of the asset or liability (e.g. interest rates, yield curves, prepayment speeds, default rates, etc.) or (ii) can be corroborated by observable market data (such as interest rate and currency derivatives and certain other securities).
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Fair Value Measurements Using | ||||||||||||||||
As of September 30, 2018 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets: | ||||||||||||||||
Trading debt securities: | ||||||||||||||||
U.S. Treasury | $ | 8.3 | $ | — | $ | — | $ | 8.3 | ||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||
U.S. Treasury and agency | 652.1 | — | — | 652.1 | ||||||||||||
GSE mortgage-backed securities | — | 2,660.0 | — | 2,660.0 | ||||||||||||
Equity securities | 8.9 | — | — | 8.9 | ||||||||||||
Other assets: | ||||||||||||||||
Exchange-traded funds | 39.1 | — | — | 39.1 | ||||||||||||
Mutual funds | 3.1 | — | — | 3.1 | ||||||||||||
Fixed income securities | — | 0.3 | — | 0.3 | ||||||||||||
Interest rate swaps | — | 45.9 | — | 45.9 | ||||||||||||
Interest rate caps | — | 3.6 | — | 3.6 | ||||||||||||
Foreign exchange contracts | — | 0.6 | — | 0.6 | ||||||||||||
Forward commitments to sell residential mortgage loans | — | 0.2 | — | 0.2 | ||||||||||||
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| |||||||||
Total | $ | 711.5 | $ | 2,710.6 | $ | — | $ | 3,422.1 | ||||||||
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| |||||||||
Financial liabilities: | ||||||||||||||||
Interest rate swaps | $ | — | $ | 207.4 | $ | — | $ | 207.4 | ||||||||
Interest rate caps | — | 3.6 | — | 3.6 | ||||||||||||
Risk participation agreements (1) | — | — | — | — | ||||||||||||
Foreign exchange contracts | — | 0.4 | — | 0.4 | ||||||||||||
Interest rate-lock commitments on residential mortgage loans | — | 0.2 | — | 0.2 | ||||||||||||
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| |||||||||
Total | $ | — | $ | 211.6 | $ | — | $ | 211.6 | ||||||||
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|
Fair Value Measurements Using As of September 30, 2019 (in millions) Level 1 Level 2 Level 3 Total Financial assets: Trading debt securities: U.S. Treasury $ 9.3 $ — $ — $ 9.3 Debt securities available-for-sale: U.S. Treasury and agency 688.1 — — 688.1 GSE mortgage-backed securities — 2,290.6 — 2,290.6 Equity securities 7.8 — — 7.8 Other assets: Exchange-traded funds 45.3 — — 45.3 Mutual funds 3.8 — — 3.8 Interest rate swaps — 421.1 — 421.1 Interest rate caps — 2.1 — 2.1 Foreign exchange contracts — 1.4 — 1.4 Forward commitments to sell residential
mortgage loans— 0.4 — 0.4 Total $ 754.3 $ 2,715.6 $ — $ 3,469.9 Financial liabilities: Interest rate swaps $ — $ 74.3 $ — $ 74.3 Interest rate caps — 2.1 — 2.1 Risk participation agreements — 0.2 — 0.2 Foreign exchange contracts — 1.3 — 1.3 Interest rate-lock commitments on residential
mortgage loans— 0.5 — 0.5 Total $ — $ 78.4 $ — $ 78.4
Fair Value Measurements Using | ||||||||||||||||
As of December 31, 2017 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets: | ||||||||||||||||
Trading debt securities: | ||||||||||||||||
U.S. Treasury | $ | 8.2 | $ | — | $ | — | $ | 8.2 | ||||||||
Debt securitiesavailable-for-sale: | ||||||||||||||||
U.S. Treasury and agency | 668.8 | — | — | 668.8 | ||||||||||||
GSE mortgage-backed securities | — | 2,456.5 | — | 2,456.5 | ||||||||||||
Equity securities | 8.7 | — | — | 8.7 | ||||||||||||
Other assets: | ||||||||||||||||
Exchange-traded funds | 36.5 | — | — | 36.5 | ||||||||||||
Mutual funds | 3.5 | — | — | 3.5 | ||||||||||||
Fixed income securities | — | 1.3 | — | 1.3 | ||||||||||||
Interest rate swaps | — | 74.8 | — | 74.8 | ||||||||||||
Interest rate caps | — | 2.8 | — | 2.8 | ||||||||||||
Foreign exchange contracts | — | 0.1 | — | 0.1 | ||||||||||||
Forward commitments to sell residential mortgage loans | — | 0.2 | — | 0.2 | ||||||||||||
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| |||||||||
Total | $ | 725.7 | $ | 2,535.7 | $ | — | $ | 3,261.4 | ||||||||
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| |||||||||
Financial liabilities: | ||||||||||||||||
Interest rate swaps | $ | — | $ | 84.9 | $ | — | $ | 84.9 | ||||||||
Interest rate caps | — | 2.8 | — | 2.8 | ||||||||||||
Risk participation agreements (1) | — | — | — | — | ||||||||||||
Foreign exchange contracts | — | 0.4 | — | 0.4 | ||||||||||||
Interest rate-lock commitments on residential mortgage loans | — | 0.2 | — | 0.2 | ||||||||||||
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| |||||||||
Total | $ | — | $ | 88.3 | $ | — | $ | 88.3 | ||||||||
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|
|
1.At December 31, 2018, |
There were no transfers into or out of the Level 1 or Level 2 categories during the nine months ended September 30, 2018 or 2017.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Fair Value Measurements Using | ||||||||||||||||
As of September 30, 2018 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Loansheld-for-sale (1) | $ | — | $ | 15.2 | $ | — | $ | 15.2 | ||||||||
Impaired loans (2) | — | — | 54.1 | 54.1 | ||||||||||||
REO and repossessed assets (3) | — | — | 15.1 | 15.1 | ||||||||||||
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| |||||||||
Total | $ | — | $ | 15.2 | $ | 69.2 | $ | 84.4 | ||||||||
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| |||||||||
Fair Value Measurements Using | ||||||||||||||||
As of December 31, 2017 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Loansheld-for-sale (1) | $ | — | $ | 16.6 | $ | — | $ | 16.6 | ||||||||
Impaired loans (2) | — | — | 59.6 | 59.6 | ||||||||||||
REO and repossessed assets (3) | — | — | 19.4 | 19.4 | ||||||||||||
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| |||||||||
Total | $ | — | $ | 16.6 | $ | 79.0 | $ | 95.6 | ||||||||
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|
Fair Value Measurements Using As of September 30, 2019 (in millions) Level 1 Level 2 Level 3 Total Loans held-for-sale (1) $ — $ 24.8 $ — $ 24.8 Impaired loans (2) — — 48.4 48.4 REO and repossessed assets (3) — — 26.3 26.3 Total $ — $ 24.8 $ 74.7 $ 99.5 Fair Value Measurements Using As of December 31, 2018 (in millions) Level 1 Level 2 Level 3 Total Loans held-for-sale (1) $ — $ 19.5 $ — $ 19.5 Impaired loans (2) — — 55.2 55.2 REO and repossessed assets (3) — — 18.1 18.1 Total $ — $ 19.5 $ 73.3 $ 92.8
Estimated Fair Value | ||||||||||||||||||||
Carrying Amount | Measurements Using | |||||||||||||||||||
As of September 30, 2018 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 410.5 | $ | 410.5 | $ | — | $ | — | $ | 410.5 | ||||||||||
Short-term investments | 127.5 | — | 127.5 | — | 127.5 | |||||||||||||||
Debt securitiesheld-to-maturity | 3,742.9 | — | 3,665.3 | 1.5 | 3,666.8 | |||||||||||||||
FHLB and FRB stock | 312.4 | — | 312.4 | — | 312.4 | |||||||||||||||
Total loans, net (1) | 31,907.2 | — | 6,582.7 | 24,805.5 | 31,388.2 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Time deposits | 6,035.9 | — | 5,997.6 | — | 5,997.6 | |||||||||||||||
Other deposits | 27,174.3 | — | 27,174.3 | — | 27,174.3 | |||||||||||||||
FHLB advances | 2,369.7 | — | 2,370.2 | — | 2,370.2 | |||||||||||||||
Federal funds purchased | 735.0 | — | 735.0 | — | 735.0 | |||||||||||||||
Customer repurchase agreements | 261.3 | — | 261.3 | — | 261.3 | |||||||||||||||
Other borrowings | 26.0 | — | 26.0 | — | 26.0 | |||||||||||||||
Notes and debentures | 885.6 | — | 892.5 | — | 892.5 |
|
Estimated Fair Value | ||||||||||||||||||||
Carrying Amount | Measurements Using | |||||||||||||||||||
As of December 31, 2017 (in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 505.1 | $ | 505.1 | $ | — | $ | — | $ | 505.1 | ||||||||||
Short-term investments | 377.5 | — | 377.5 | — | 377.5 | |||||||||||||||
Debt securitiesheld-to-maturity | 3,588.1 | — | 3,632.2 | 1.5 | 3,633.7 | |||||||||||||||
FHLB and FRB stock | 312.3 | — | 312.3 | — | 312.3 | |||||||||||||||
Total loans, net (1) | 32,281.3 | — | 6,632.2 | 25,495.3 | 32,127.5 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Time deposits | 5,454.3 | — | 5,441.1 | — | 5,441.1 | |||||||||||||||
Other deposits | 27,602.0 | — | 27,602.0 | — | 27,602.0 | |||||||||||||||
FHLB advances | 2,774.4 | — | 2,775.3 | — | 2,775.3 | |||||||||||||||
Federal funds purchased | 820.0 | — | 820.0 | — | 820.0 | |||||||||||||||
Customer repurchase agreements | 301.6 | — | 301.6 | — | 301.6 | |||||||||||||||
Other borrowings | 207.8 | — | 207.2 | — | 207.2 | |||||||||||||||
Notes and debentures | 901.6 | — | 910.1 | — | 910.1 |
|
As of September 30, 2019 (in millions) Level 1 Level 2 Level 3 Total Financial assets: Cash and due from banks $ 635.2 $ 635.2 $ — $ — $ 635.2 Short-term investments 157.8 — 157.8 — 157.8 Debt securities held-to-maturity 3,805.4 — 3,970.0 1.5 3,971.5 FHLB and FRB stock 334.0 — 334.0 — 334.0 Total loans, net (1) 38,487.0 — 9,064.9 29,474.3 38,539.2 Financial liabilities: Time deposits 8,100.4 — 8,120.9 — 8,120.9 Other deposits 30,473.1 — 30,473.1 — 30,473.1 FHLB advances 2,948.5 — 2,948.8 — 2,948.8 Federal funds purchased 1,365.0 — 1,365.0 — 1,365.0 Customer repurchase agreements 315.6 — 315.6 — 315.6 Notes and debentures 915.7 — 936.8 — 936.8
Carrying Amount | Estimated Fair Value Measurements Using | ||||||||||||||||||||||||||||||||||||||||
As of December 31, 2018 (in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||||||||||||||
Cash and due from banks | $ | 665.7 | $ | 665.7 | $ | — | $ | — | $ | 665.7 | |||||||||||||||||||||||||||||||
Short-term investments | 266.3 | — | 266.3 | — | 266.3 | ||||||||||||||||||||||||||||||||||||
Debt securities held-to-maturity | 3,792.3 | — | 3,774.4 | 1.5 | 3,775.9 | ||||||||||||||||||||||||||||||||||||
FHLB and FRB stock | 303.4 | — | 303.4 | — | 303.4 | ||||||||||||||||||||||||||||||||||||
Total loans, net (1) | 34,945.8 | — | 7,806.1 | 26,800.2 | 34,606.3 | ||||||||||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||||||||||||||
Time deposits | 6,916.2 | — | 6,884.0 | — | 6,884.0 | ||||||||||||||||||||||||||||||||||||
Other deposits | 29,242.8 | — | 29,242.8 | — | 29,242.8 | ||||||||||||||||||||||||||||||||||||
FHLB advances | 2,404.5 | — | 2,404.5 | — | 2,404.5 | ||||||||||||||||||||||||||||||||||||
Federal funds purchased | 845.0 | — | 845.0 | — | 845.0 | ||||||||||||||||||||||||||||||||||||
Customer repurchase agreements | 332.9 | — | 332.9 | — | 332.9 | ||||||||||||||||||||||||||||||||||||
Other borrowings | 11.0 | — | 11.0 | — | 11.0 | ||||||||||||||||||||||||||||||||||||
Notes and debentures | 895.8 | — | 893.4 | — | 893.4 |
NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
2019 was $1.4 million, for which People’s United had posted collateral of $0.8 million in the normal course of business. If the Company’s senior unsecured debt rating had fallen below investment grade as of that date, $0.6 million in additional collateral would have been required.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Fair Values (1) | ||||||||||||||||||||||||||||
Notional Amounts | Assets | Liabilities | ||||||||||||||||||||||||||
(in millions) | Type of Hedge | Sept. 30, 2018 | Dec. 31, 2017 | Sept. 30, 2018 | Dec. 31, 2017 | Sept. 30, 2018 | Dec. 31, 2017 | |||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||||||
Commercial customers | N/A | $ | 6,576.2 | $ | 5,769.1 | $ | 17.5 | $ | 64.7 | $ | 199.1 | $ | 61.2 | |||||||||||||||
Institutional counterparties | N/A | 6,282.0 | 5,775.9 | 28.4 | 10.1 | 8.3 | 23.7 | |||||||||||||||||||||
Interest rate caps: | ||||||||||||||||||||||||||||
Commercial customers | N/A | 313.0 | 649.2 | — | — | 3.6 | 2.8 | |||||||||||||||||||||
Institutional counterparties | N/A | 313.0 | 649.2 | 3.6 | 2.8 | — | — | |||||||||||||||||||||
Risk participation agreements (2) | N/A | 455.4 | 439.4 | — | — | — | — | |||||||||||||||||||||
Foreign exchange contracts | N/A | 99.2 | 46.5 | 0.6 | 0.1 | 0.4 | 0.4 | |||||||||||||||||||||
Forward commitments to sell | N/A | 18.9 | 16.4 | 0.2 | 0.2 | — | — | |||||||||||||||||||||
Interest rate-lock commitments on residential mortgage loans | N/A | 24.0 | 18.3 | — | — | 0.2 | 0.2 | |||||||||||||||||||||
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Total | 50.3 | 77.9 | 211.6 | 88.3 | ||||||||||||||||||||||||
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Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||||||
Subordinated notes | Fair value | 375.0 | 375.0 | — | — | — | — | |||||||||||||||||||||
Loans | Cash flow | 210.0 | 210.0 | — | — | — | — | |||||||||||||||||||||
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Total | — | — | — | — | ||||||||||||||||||||||||
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Total fair value of derivatives | $ | 50.3 | $ | 77.9 | $ | 211.6 | $ | 88.3 | ||||||||||||||||||||
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Fair Values (1) Notional Amounts Assets Liabilities (in millions) Sept. 30,
2019Dec 31,
2018Sept. 30,
2019Dec 31, 2018 Sept. 30,
2019Dec 31, 2018 Derivatives Not Designated as Hedging
Instruments:Interest rate swaps: Commercial customers N/A $ 7,592.8 $ 7,455.9 $ 416.2 $ 76.3 $ 0.7 $ 102.6 Institutional counterparties N/A 7,599.6 7,161.3 4.9 22.6 73.6 32.4 Interest rate caps: Commercial customers N/A 264.2 329.1 2.1 0.6 — 2.5 Institutional counterparties N/A 264.2 329.1 — 2.5 2.1 0.6 Risk participation agreements (2) N/A 786.6 576.5 — — 0.2 — Foreign exchange contracts N/A 74.8 145.2 1.4 0.9 1.3 0.8 Forward commitments to sell
residential mortgage loansN/A 34.8 9.5 0.4 0.1 — — Interest rate-lock commitments on
residential mortgage loansN/A 54.9 13.6 — — 0.5 0.1 Total 425.0 103.0 78.4 139.0 Derivatives Designated as Hedging
Instruments:Interest rate swaps: Subordinated notes Fair value 375.0 375.0 — — — — Loans Cash flow 210.0 210.0 — — — — Total — — — — Total fair value of derivatives $ 425.0 $ 103.0 $ 78.4 $ 139.0
Amount of Pre-Tax Gain (Loss) | Amount ofPre-Tax Gain (Loss) | |||||||||||||||||||
Type of Hedge | Recognized in Earnings (1) | Recognized in AOCL | ||||||||||||||||||
Nine months ended September 30 (in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||
Commercial customers | N/A | $ | (177.1 | ) | $ | 44.2 | $ | — | $ | — | ||||||||||
Institutional counterparties | N/A | 184.5 | (38.4 | ) | — | — | ||||||||||||||
Interest rate caps: | ||||||||||||||||||||
Commercial customers | N/A | (0.7 | ) | 1.2 | — | — | ||||||||||||||
Institutional counterparties | N/A | 0.8 | (0.7 | ) | — | — | ||||||||||||||
Foreign exchange contracts | N/A | 0.6 | 0.3 | — | — | |||||||||||||||
Risk participation agreements | N/A | 0.2 | 0.5 | — | — | |||||||||||||||
Forward commitments to sell residential mortgage loans | N/A | — | 0.1 | — | — | |||||||||||||||
Interest rate-lock commitments on residential mortgage loans | N/A | — | (0.1 | ) | — | — | ||||||||||||||
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Total | 8.3 | 7.1 | — | — | ||||||||||||||||
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Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||
Interest rate swaps | Fair value | (1.8 | ) | 4.5 | — | — | ||||||||||||||
Interest rate swaps | Cash flow | (0.3 | ) | 0.6 | (3.1 | ) | 0.4 | |||||||||||||
Interest rate locks | Cash flow | 0.1 | 0.1 | — | — | |||||||||||||||
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Total | (2.0 | ) | 5.2 | (3.1 | ) | 0.4 | ||||||||||||||
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Total | $ | 6.3 | $ | 12.3 | $ | (3.1 | ) | $ | 0.4 | |||||||||||
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Type of Hedge | Amount of Pre-Tax Gain (Loss) Recognized in Earnings (1) | Amount of Pre-Tax Gain (Loss) Recognized in AOCL | |||||||||||||||||||||||||||||||||||||||
Nine months ended September 30 (in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||
Interest rate swaps: | |||||||||||||||||||||||||||||||||||||||||
Commercial customers | N/A | $ | 466.8 | $ | (177.1) | $ | — | $ | — | ||||||||||||||||||||||||||||||||
Institutional counterparties | N/A | (451.3) | 184.5 | — | — | ||||||||||||||||||||||||||||||||||||
Interest rate caps: | |||||||||||||||||||||||||||||||||||||||||
Commercial customers | N/A | 2.0 | (0.7) | — | — | ||||||||||||||||||||||||||||||||||||
Institutional counterparties | N/A | (2.0) | 0.8 | — | — | ||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | N/A | 0.5 | 0.6 | — | — | ||||||||||||||||||||||||||||||||||||
Risk participation agreements | N/A | 0.1 | 0.2 | — | — | ||||||||||||||||||||||||||||||||||||
Forward commitments to sell residential mortgage loans | N/A | 0.3 | — | — | — | ||||||||||||||||||||||||||||||||||||
Interest rate-lock commitments on residential mortgage loans | N/A | (0.3) | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | 16.1 | 8.3 | — | — | |||||||||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||
Interest rate swaps | Fair value | (0.2) | (1.8) | — | — | ||||||||||||||||||||||||||||||||||||
Interest rate swaps | Cash flow | (1.1) | (0.3) | 2.1 | (3.1) | ||||||||||||||||||||||||||||||||||||
Interest rate locks | Cash flow | 0.1 | 0.1 | — | — | ||||||||||||||||||||||||||||||||||||
Total | (1.2) | (2.0) | 2.1 | (3.1) | |||||||||||||||||||||||||||||||||||||
Total | $ | 14.9 | $ | 6.3 | $ | 2.1 | $ | (3.1) |
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NOTE 13. BALANCE SHEET OFFSETTING |
NOTE 12. BALANCE SHEET OFFSETTING
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
The Chicago Mercantile Exchange (“CME”) legally characterizes variation margin payments forover-the-counter derivatives that clear as settlements rather than collateral. Accordingly, the Company’s accounting policies classify, for accounting and presentation purposes, variation margin payments deemed to be legal settlements as a single unit of account with the related derivative(s). At both September 30, 20182019 and December 31, 2017,2018, this presentation impacted one of the Company’s institutional counterparties. As such, People’s United has, subject to the corresponding enforceable master netting arrangement, netted the institutional counterparty’s CME derivative position and offset the counterparty’s variation margin payments in the Consolidated Statement of Condition as of both dates.
Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Gross Amounts Not Offset | |||||||||||||||||||||
Financial | Net | |||||||||||||||||||||||
As of September 30, 2018 (in millions) | Instruments | Collateral | Amount | |||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||
Counterparty A | $ | 5.1 | $ | — | $ | 5.1 | $ | (1.0 | ) | $ | (4.1 | ) | $ | — | ||||||||||
Counterparty B | 4.4 | — | 4.4 | (2.7 | ) | (1.7 | ) | — | ||||||||||||||||
Counterparty C | 10.3 | — | 10.3 | (1.2 | ) | (9.1 | ) | — | ||||||||||||||||
Counterparty D | 6.3 | — | 6.3 | (1.4 | ) | (4.9 | ) | — | ||||||||||||||||
Counterparty E | — | — | — | — | — | — | ||||||||||||||||||
Other counterparties | 5.9 | — | 5.9 | (0.1 | ) | (5.7 | ) | 0.1 | ||||||||||||||||
Foreign exchange contracts | 0.6 | — | 0.6 | — | — | 0.6 | ||||||||||||||||||
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Total | $ | 32.6 | $ | — | $ | 32.6 | $ | (6.4 | ) | $ | (25.5 | ) | $ | 0.7 | ||||||||||
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Financial liabilities: | ||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||
Counterparty A | $ | 1.0 | $ | — | $ | 1.0 | $ | (1.0 | ) | $ | — | $ | — | |||||||||||
Counterparty B | 2.7 | — | 2.7 | (2.7 | ) | — | — | |||||||||||||||||
Counterparty C | 1.2 | — | 1.2 | (1.2 | ) | — | — | |||||||||||||||||
Counterparty D | 1.4 | — | 1.4 | (1.4 | ) | — | — | |||||||||||||||||
Counterparty E | 1.9 | — | 1.9 | — | — | 1.9 | ||||||||||||||||||
Other counterparties | 0.1 | — | 0.1 | (0.1 | ) | — | — | |||||||||||||||||
Foreign exchange contracts | 0.4 | — | 0.4 | — | — | 0.4 | ||||||||||||||||||
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Total | $ | 8.7 | $ | — | $ | 8.7 | $ | (6.4 | ) | $ | — | $ | 2.3 | |||||||||||
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Gross Amounts Not Offset As of September 30, 2019 (in millions) Collateral Financial assets: Interest rate swaps: Counterparty A $ — $ — $ — $ — $ — $ — Counterparty B 0.1 — 0.1 (0.1) — — Counterparty C 0.1 — 0.1 (0.1) — — Counterparty D — — — — — — Counterparty E 4.5 — 4.5 — — 4.5 Other counterparties 0.2 — 0.2 (0.2) — — Foreign exchange contracts 1.4 — 1.4 — — 1.4 Total $ 6.3 $ — $ 6.3 $ (0.4) $ — $ 5.9 Financial liabilities: Interest rate swaps: Counterparty A $ 3.2 $ — $ 3.2 $ — $ (3.2) $ — Counterparty B 7.1 — 7.1 (0.1) (7.0) — Counterparty C 23.8 — 23.8 (0.1) (23.7) — Counterparty D 7.6 — 7.6 — (7.6) — Counterparty E — — — — — — Other counterparties 34.0 — 34.0 (0.2) (33.2) 0.6 Foreign exchange contracts 1.3 — 1.3 — — 1.3 Total $ 77.0 $ — $ 77.0 $ (0.4) $ (74.7) $ 1.9
Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Gross Amounts Not Offset | |||||||||||||||||||||
Financial | Net | |||||||||||||||||||||||
As of December 31, 2017 (in millions) | Instruments | Collateral | Amount | |||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||
Counterparty A | $ | 2.6 | $ | — | $ | 2.6 | $ | (2.5 | ) | $ | — | $ | 0.1 | |||||||||||
Counterparty B | 1.6 | — | 1.6 | (1.6 | ) | — | — | |||||||||||||||||
Counterparty C | 2.6 | — | 2.6 | (2.6 | ) | — | — | |||||||||||||||||
Counterparty D | 3.5 | — | 3.5 | (3.5 | ) | — | — | |||||||||||||||||
Counterparty E | — | — | — | — | — | — | ||||||||||||||||||
Other counterparties | 2.6 | — | 2.6 | (0.2 | ) | (2.4 | ) | — | ||||||||||||||||
Foreign exchange contracts | 0.1 | — | 0.1 | — | — | 0.1 | ||||||||||||||||||
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Total | $ | 13.0 | $ | — | $ | 13.0 | $ | (10.4 | ) | $ | (2.4 | ) | $ | 0.2 | ||||||||||
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Financial liabilities: | ||||||||||||||||||||||||
Interest rate swaps: | ||||||||||||||||||||||||
Counterparty A | $ | 2.5 | $ | — | $ | 2.5 | $ | (2.5 | ) | $ | — | $ | — | |||||||||||
Counterparty B | 5.6 | — | 5.6 | (1.6 | ) | (4.0 | ) | — | ||||||||||||||||
Counterparty C | 2.8 | — | 2.8 | (2.6 | ) | (0.2 | ) | — | ||||||||||||||||
Counterparty D | 4.7 | — | 4.7 | (3.5 | ) | (1.2 | ) | — | ||||||||||||||||
Counterparty E | 7.3 | — | 7.3 | — | — | 7.3 | ||||||||||||||||||
Other counterparties | 0.8 | — | 0.8 | (0.2 | ) | (0.6 | ) | — | ||||||||||||||||
Foreign exchange contracts | 0.4 | — | 0.4 | — | — | 0.4 | ||||||||||||||||||
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Total | $ | 24.1 | $ | — | $ | 24.1 | $ | (10.4 | ) | $ | (6.0 | ) | $ | 7.7 | ||||||||||
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Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Gross Amounts Not Offset | ||||||||||||||||||||||||||||||||||||||
Financial Instruments | Net Amount | ||||||||||||||||||||||||||||||||||||||||
As of December 31, 2018 (in millions) | Collateral | ||||||||||||||||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||||||||||||||
Interest rate swaps: | |||||||||||||||||||||||||||||||||||||||||
Counterparty A | $ | 3.1 | $ | — | $ | 3.1 | $ | (1.4) | $ | (1.7) | $ | — | |||||||||||||||||||||||||||||
Counterparty B | 2.5 | — | 2.5 | (2.5) | — | — | |||||||||||||||||||||||||||||||||||
Counterparty C | 4.8 | — | 4.8 | (3.7) | (1.1) | — | |||||||||||||||||||||||||||||||||||
Counterparty D | 3.6 | — | 3.6 | (2.7) | (0.1) | 0.8 | |||||||||||||||||||||||||||||||||||
Counterparty E | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Other counterparties | 11.1 | — | 11.1 | (5.4) | (5.7) | — | |||||||||||||||||||||||||||||||||||
Foreign exchange contracts | 0.9 | — | 0.9 | — | — | 0.9 | |||||||||||||||||||||||||||||||||||
Total | $ | 26.0 | $ | — | $ | 26.0 | $ | (15.7) | $ | (8.6) | $ | 1.7 | |||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||||||||||||||
Interest rate swaps: | |||||||||||||||||||||||||||||||||||||||||
Counterparty A | $ | 1.4 | $ | — | $ | 1.4 | $ | (1.4) | $ | — | $ | — | |||||||||||||||||||||||||||||
Counterparty B | 3.8 | — | 3.8 | (2.5) | (1.2) | 0.1 | |||||||||||||||||||||||||||||||||||
Counterparty C | 3.7 | — | 3.7 | (3.7) | — | — | |||||||||||||||||||||||||||||||||||
Counterparty D | 2.7 | — | 2.7 | (2.7) | — | — | |||||||||||||||||||||||||||||||||||
Counterparty E | 16.0 | — | 16.0 | — | — | 16.0 | |||||||||||||||||||||||||||||||||||
Other counterparties | 5.4 | — | 5.4 | (5.4) | — | — | |||||||||||||||||||||||||||||||||||
Foreign exchange contracts | 0.8 | — | 0.8 | — | — | 0.8 | |||||||||||||||||||||||||||||||||||
Total | $ | 33.8 | $ | — | $ | 33.8 | $ | (15.7) | $ | (1.2) | $ | 16.9 |
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
The following tables show the extent to which assets and liabilities exchanged under resale and repurchase agreements have been offset in the Consolidated Statements of Condition. These agreements: (i) are entered into simultaneously with the same financial institution counterparty; (ii) have the same principal amounts and inception/maturity dates; and (iii) are subject to a master netting arrangement that contains a conditional right of offset upon default. At September 30, 20182019 and December 31, 2017,2018, the Company posted as collateral marketable securities with fair values of $463.9$462.6 million and $453.8$461.3 million, respectively, and, in turn, accepted as collateral marketable securities with fair values of $453.8$458.2 million and $461.9$457.2 million, respectively.
As of September 30, 2018 (in millions) | Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | |||||||||
Total resale agreements | $ | 450.0 | $ | (450.0 | ) | $ | — | |||||
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Total repurchase agreements | $ | 450.0 | $ | (450.0 | ) | $ | — | |||||
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As of December 31, 2017 (in millions) | Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | |||||||||
Total resale agreements | $ | 450.0 | $ | (450.0 | ) | $ | — | |||||
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Total repurchase agreements | $ | 450.0 | $ | (450.0 | ) | $ | — | |||||
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NOTE 13. NEW ACCOUNTING STANDARDS
As of September 30, 2019 (in millions) | Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | ||||||||||||||
Total resale agreements | $ | 450.0 | $ | (450.0) | $ | — | |||||||||||
Total repurchase agreements | $ | 450.0 | $ | (450.0) | $ | — | |||||||||||
As of December 31, 2018 (in millions) | Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | ||||||||||||||
Total resale agreements | $ | 450.0 | $ | (450.0) | $ | — | |||||||||||
Total repurchase agreements | $ | 450.0 | $ | (450.0) | $ | — |
NOTE 14. LEASES |
(in millions) | September 30, 2019 | ||||||||||
Lease payments receivable | $ | 1,380.0 | |||||||||
Estimated residual value of leased assets | 128.4 | ||||||||||
Gross investment in lease financing receivables | 1,508.4 | ||||||||||
Plus: Deferred origination costs | 13.5 | ||||||||||
Less: Unearned income | (154.4) | ||||||||||
Total net investment in lease financing receivables | $ | 1,367.5 |
(in millions) | September 30, 2019 | ||||
2019 (1) | $ | 229.7 | |||
2020 | 454.8 | ||||
2021 | 357.7 | ||||
2022 | 245.2 | ||||
2023 | 137.0 | ||||
Later years | 84.0 | ||||
Total | $ | 1,508.4 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(in millions) | September 30, 2019 | September 30, 2019 | |||||||||||||||||||||||||||
Operating lease cost | $ | 15.0 | $ | 45.4 | |||||||||||||||||||||||||
Variable lease cost | 2.0 | 6.4 | |||||||||||||||||||||||||||
Sublease income | (0.3) | (1.0) | |||||||||||||||||||||||||||
Net lease cost | $ | 16.7 | $ | 50.8 |
(dollars in millions) | As of and for Nine Months Ended September 30, 2019 | ||||||||||
Lease ROU assets | $ | 235.6 | |||||||||
Lease liabilities | 260.5 | ||||||||||
Cash payments included in the measurement of lease liabilities reported in operating cash flows | 45.8 | ||||||||||
ROU assets obtained in exchange for lessee operating lease liabilities (1) | 30.3 | ||||||||||
Weighted average discount rate | 3.28 | % | |||||||||
Weighted average remaining lease term (in years) | 7.0 |
(in millions) | September 30, 2019 | ||||||||||
2019 (1) | $ | 15.1 | |||||||||
2020 | 59.1 | ||||||||||
2021 | 56.7 | ||||||||||
2022 | 39.5 | ||||||||||
2023 | 28.3 | ||||||||||
Later years | 102.8 | ||||||||||
Total lease payments | 301.5 | ||||||||||
Less: Interest | (41.0) | ||||||||||
Total lease liabilities | $ | 260.5 |
NOTE 15. NEW ACCOUNTING STANDARDS |
Revenue Recognition
2019
In July 2015, the FASB approved aone-year deferral of the effective date (January 1, 2018 for People’s United) with early adoption, as of the original effective date, permitted. The FASB subsequently issued amendments to clarify the implementation guidance and add some practical expedients in certain areas, including: (i) principal versus agent considerations; (ii) the identification of performance obligations; and (iii) certain aspects of the accounting for licensing arrangements. These amendments did not change the core principle of the guidance and are effective for and follow the same transition requirements as the core principle.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
The Company’s revenue is comprised of net interest income on financial assets and financial liabilities (approximately75-80%) andnon-interest income (approximately20-25%). The scope of the guidance explicitly excludes net interest income as well as other revenues associated with financial assets and financial liabilities, including loans, leases, securities and derivatives. Accordingly, the majority of the Company’s revenues are not affected. Certain other recurring revenue streams included innon-interest income are within the scope of the guidance, including service charges and fees on deposit accounts as well as card-based and othernon-deposit fees (all included within bank service charges), and revenues associated with certain products and services offered by the Company’s investment management, insurance and brokerage businesses.
In completing its assessment of those revenue streams within the scope of the guidance, the Company identified one revenue source for which the timing of recognition changes under the new standard. The Company previously recognized revenue for certain insurance brokerage activities, such as installments on agency bill, direct bill and contingent commission revenue, over a period of time either due to the transfer of value to customers or as the remuneration becomes determinable. Under the new guidance, certain of these revenues, as well as certain costs associated with originating such policies, are now substantially recognized on the effective date of the associated policies when control of the policy transfers to the customer.
The guidance was adopted on January 1, 2018 using the modified retrospective method and resulted in a cumulative-effect transition adjustment which served to increase opening retained earnings by $0.6 million(net-of-tax). While the adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements, its current accounting policies and practices or the timing or amount of revenue recognized, the Company has, where appropriate, completed the necessary changes to its business processes, systems and internal controls in order to support the recognition, measurement and disclosure requirements of the new standard.
For revenue streams within the scope of the guidance, the Company applies the following steps when recognizing revenue from contracts with customers: (i) identify the contract; (ii) identify the performance obligation; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation; and (v) recognize revenue when the performance obligation is satisfied. The Company’s contracts with customers are generally short-term in nature, typically due within one year or less, or cancellable by the Company or the customer upon a short notice period. Performance obligations for customer contracts are generally satisfied at a single point in time, typically when the transaction is complete, or over time. For performance obligations satisfied over time, the value of the products/services transferred to the customer are evaluated to determine when, and to what degree, performance obligations have been satisfied. Payments from customers are typically received, and revenue recognized, concurrent with the satisfaction of our performance obligations. In most cases, this occurs within a single financial reporting period. For payments received in advance of the satisfaction of our performance obligations, revenue recognition is deferred until such time the performance obligations have been satisfied. In cases where a payment has not been received despite satisfaction of our performance obligations, an estimate of the amount due is accrued in the period our performance obligations have been satisfied. For contracts with variable components, amounts for which collection is probable are accrued.
The following summarizes the Company’s performance obligations for those revenue streams deemed to be within the scope of the guidance:
Service charges and fees on deposit accounts – Service charges and fees on deposit accounts consist of monthly account maintenance and other related fees. The Company’s performance obligation for monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Other deposit account related fees, including overdraft charges, are largely transactional-based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Card-based and othernon-deposit fees –Card-based and othernon-deposit fees are comprised, primarily, of debit and credit card income and ATM fees. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks. ATM fees are largely transactional-based and, therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment is typically received immediately or in the following month.
Investment management fees – Investment management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon themonth-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e. as incurred). Payment is received shortly after services are rendered.
Insurance commissions and fees – The Company’s insurance revenue has two distinct performance obligations. The first performance obligation is the selling of the policy as an agent for the carrier. This performance obligation is satisfied upon binding of the policy. The second performance obligation is the ongoing servicing of the policy which is satisfied over the life of the policy. For employee benefits, the payment is typically received monthly. For property and casualty, payments can vary but are typically received at, or in advance of, the start of the policy period.
Brokerage commissions and fees – Brokerage commissions and fees primarily relate to investment advisory and brokerage activities as well as the sale of mutual funds and annuities. The Company’s performance obligation for investment advisory services is generally satisfied, and the related revenue recognized, over the period in which the services are provided. Fees earned for brokerage activities, such as facilitating securities transactions, are generally recognized at the time of transaction execution. The performance obligation for mutual fund and annuity sales is satisfied upon sale of the underlying investment and, therefore, the related revenue is primarily recognized at the time of sale. Payment for these services is typically received immediately or in advance of the service.
The Company generally acts in a principal capacity, on its own behalf, in the majority of its contracts with customers. In such transactions, revenue and the related costs to provide our services are recognized on a gross basis in the financial statements. In some cases, the Company may act in an agent capacity, deriving revenue by assisting other entities in transactions with our customers. In such transactions, revenue and the related costs to provide our services are recognized on a net basis in the financial statements. The extent of the Company’s activities for which it acts as an agent (and for which the related revenue and expense has been presented on a net basis) is immaterial.
Presentation of Deferred Taxes
In November 2015, the FASB amended its standards with respect to the presentation of deferred income taxes to eliminate the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of condition, thereby simplifying the presentation of deferred income taxes. This amendment, which is being applied prospectively, became effective for People’s United on January 1, 2018 and did not have a significant impact on the Company’s Consolidated Financial Statements.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Recognition and Measurement of Financial Instruments
In January 2016, the FASB amended its standards to address certain aspects of recognition, presentation and disclosure of financial instruments. The amended guidance (i) requires that equity investments (other than equity method investments) be measured at fair value with changes in fair value recognized in net income and (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by permitting a qualitative assessment to identify impairment. BothFRB-NY and FHLB stock will continue to be presented at cost. The guidance also contains additional disclosure and presentation requirements associated with financial instruments. Specifically, the standard emphasizes the existing requirement to use “exit price” when determining fair value for disclosure purposes, clarifying that entities should not make use of a practicability exception in determining the fair value of loans.
This amendment became effective for People’s United on January 1, 2018. The cumulative effect transition method was applied to all outstanding instruments as of the date of adoption, while changes to the accounting for equity investments without readily determinable fair values will be applied prospectively. At December 31, 2017, the Company’s securities portfolio included equity securities with an amortized cost of $9.6 million and a fair value of $8.7 million. Accordingly, upon adoption of the guidance, a cumulative-effect transition adjustment, representing the cumulative unrealized loss(net-of-tax) within AOCL, was recorded which served to decrease opening retained earnings by $0.6 million. Any further changes in the fair value of equity securities have been recorded in net income. Given the current composition of the Company’s securities portfolio, the standard is not expected to have a significant impact on the Company’s Consolidated Financial Statements. The additional disclosure and presentation requirements set forth in the standard, including the Company’s approach to determining the fair value of itsheld-for-investment loan portfolio for disclosure purposes, have been reflected in the Consolidated Statements of Condition and Note 10, as applicable.
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
In August 2016, the FASB amended its standards to address the classification of certain cash receipts and payments within the statement of cash flows. Specifically, the amended guidance addresses the following: (i) debt prepayment or debt extinguishment costs; (ii) settlement ofzero-coupon bonds; (iii) contingent payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle. This amendment, which is required to be applied retrospectively, became effective for People’s United on January 1, 2018 and did not have a significant impact on the Company’s Consolidated Financial Statements. The classification of cash receipts and payments, as required by the standard and applicable to the Company, has been reflected in the Consolidated Statements of Cash Flows.
Asset Derecognition and Accounting for Partial Sales of Nonfinancial Assets
In February 2017, the FASB amended its standards to clarify the scope of its guidance on derecognition of a nonfinancial asset and provide additional guidance on the definition ofin-substance nonfinancial assets and partial sales of nonfinancial assets. Under prior guidance, several different accounting models existed for use in evaluating whether the transfer of certain assets qualified for sale treatment. The amended guidance reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. This amendment, which is being applied prospectively, became effective for People’s United on January 1, 2018 and did not have a significant impact on the Company’s Consolidated Financial Statements.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
In March 2017, the FASB amended its standards to (i) require that the service cost component of net benefit cost associated with pension and postretirement plans be reported in the same line item in which the related employees’ compensation cost is reported and (ii) specify that only the service cost component is eligible for capitalization. The other components of net benefit cost, which may not be capitalized, are to be presented separately. This amendment, which is required to be applied retrospectively, became effective for People’s United on January 1, 2018. Accordingly, net periodic pension and postretirement benefit income (a result of the expected return on plan assets exceeding the sum of the other components) previously reported within compensation and benefits expense is now reported within othernon-interest expense in the Consolidated Statements of Income. For the three and nine months ended September 30, 2017, $1.9 million and $6.3 million, respectively, of net periodic pension and postretirement benefit incomehas been reclassified in accordance with the requirements of the standard.
Stock Compensation
In July 2017, the FASB amended its standards with respect to share-based payment awards to provide explicit guidance pertaining to the provisions of modification accounting. The amendment clarifies that an entity should not account for the effects of a modification if the award’s fair value, vesting conditions and classification (as either debt or equity) are the same immediately before and after the modification. This amendment, which is being applied prospectively to awards modified on or after the adoption date, became effective for People’s United on January 1, 2018 and did not have a significant impact on the Company’s Consolidated Financial Statements.
Standards effective in 2019
Accounting for Leases
In February 2016, the FASB amended its standards with respect to the accounting for leases. The amended guidance serves to replace all current GAAP guidance on this topic and requires that an operating lease be recognized on the statement of condition as a “right-of-use”ROU asset along with a corresponding liability representing the rent obligation. Key aspects of current lessor accounting generally remain unchanged from existing guidance, although the definition of eligible initial direct costs (“IDC”) has been amended. Most notably, this standard is expected to result in an increase to assets and liabilities recognized and, therefore, increaserisk-weighted assets for regulatory capital purposes. The guidance will becomebecame effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (January 1, 2019 for People’s United) and, as originally issued, requiresrequired the use of the modified retrospective transition approach for existing leases that have not expired before the date of initial application.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
The Company plans to electelected the optional transition method which will resultresults in the modified retrospective approach being applied on January 1, 2019 (as opposed to January 1, 2017). The Company also expects to electelected certain transition relief options provided in the standard, including the package of practical expedients. These relief options allow the Company to forego (i) the recognition of right-of-useROU assets and lease liabilities arising from short-term leases (i.e. leases with terms of twelve months or less) and (ii) a reassessment as to: (a) whether expired or existing contracts are or contain leases; (b) the lease classification for expired or existing leases; and (c) whether previously capitalized IDC for existing leases would qualify for capitalization under the standard. At this time, theThe Company doesdid not plan to elect the hindsight practical expedient which allows entities to use hindsight when determining lease term and impairment of right-of-useROU assets.
In preparing for adoption, the
At this time, theConsolidated Financial Statements – (Unaudited)
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Derivatives and Hedging
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Standards effective in 2020
In preparing for adoption,
standard, including related disclosures. For the remainder of 2019, the Company plans to further test, refine and validate its loss estimation framework during continued parallel runs that involve a comprehensive assessment of: (i) model functionality; (ii) internal control design and effectiveness; and (iii) related governance activities.
People’s United Financial, Inc.
Notes to Consolidated Financial Statements – (Unaudited)
Simplifying the Test for Goodwill Impairment
NOTE 14. SUBSEQUENT EVENTS
Acquisition
NOTE 16. SUBSEQUENT EVENTS |
Branches
Forward-Looking Statements
Forward Looking Statements |
Completed Acquisition
Completed Acquisitions |
Selected
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(dollars in millions, except per common share data) | Sept. 30, 2018 | June 30, 2018 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | |||||||||||||||
Earnings Data: | ||||||||||||||||||||
Net interest income (fully taxable equivalent) | $ | 313.0 | $ | 307.8 | $ | 295.8 | $ | 922.9 | $ | 839.1 | ||||||||||
Net interest income | 306.4 | 301.2 | 284.6 | 903.4 | 808.1 | |||||||||||||||
Provision for loan losses | 8.2 | 6.5 | 7.0 | 20.1 | 18.5 | |||||||||||||||
Non-interest income | 92.3 | 94.9 | 89.3 | 277.6 | 265.6 | |||||||||||||||
Non-interest expense (1) | 241.3 | 248.6 | 237.1 | 733.4 | 720.5 | |||||||||||||||
Income before income tax expense | 149.2 | 141.0 | 129.8 | 427.5 | 334.7 | |||||||||||||||
Net income | 117.0 | 110.2 | 90.8 | 335.1 | 230.9 | |||||||||||||||
Net income available to common shareholders (1) | 113.5 | 106.7 | 87.3 | 324.6 | 220.4 | |||||||||||||||
Selected Statistical Data: | ||||||||||||||||||||
Net interest margin (2) | 3.15 | % | 3.10 | % | 3.04 | % | 3.10 | % | 2.94 | % | ||||||||||
Return on average assets (1),(2) | 1.06 | 1.00 | 0.84 | 1.01 | 0.73 | |||||||||||||||
Return on average common equity (2) | 8.0 | 7.6 | 6.4 | 7.7 | 5.6 | |||||||||||||||
Return on average tangible common equity (1),(2) | 14.5 | 13.9 | 11.8 | 14.1 | 10.0 | |||||||||||||||
Efficiency ratio (1) | 56.7 | 58.4 | 57.3 | 58.2 | 58.3 | |||||||||||||||
Common Share Data: | ||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 0.33 | $ | 0.31 | $ | 0.26 | $ | 0.95 | $ | 0.67 | ||||||||||
Diluted (1) | 0.33 | 0.31 | 0.26 | 0.94 | 0.67 | |||||||||||||||
Dividends paid per common share | 0.1750 | 0.1750 | 0.1725 | 0.5225 | 0.5150 | |||||||||||||||
Common dividend payout ratio (1) | 52.9 | % | 56.2 | % | 66.8 | % | 55.1 | % | 76.8 | % | ||||||||||
Book value per common share (end of period) | $ | 16.69 | $ | 16.56 | $ | 16.29 | $ | 16.69 | $ | 16.29 | ||||||||||
Tangible book value per common share (end of period) (1) | 9.19 | 9.02 | 8.68 | 9.19 | 8.68 | |||||||||||||||
Stock price: | ||||||||||||||||||||
High | 19.00 | 19.37 | 18.26 | 20.26 | 19.85 | |||||||||||||||
Low | 16.95 | 18.00 | 15.97 | 16.95 | 15.97 | |||||||||||||||
Close (end of period) | 17.12 | 18.09 | 18.14 | 17.12 | 18.14 |
| ||
Sale of Branches |
Selected Consolidated Financial Information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per common share data) | Sept. 30, 2019 | June 30, 2019 | Sept. 30, 2018 | Sept. 30, 2019 | Sept. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (fully taxable equivalent) | $ | 356.0 | $ | 355.4 | $ | 313.0 | $ | 1,051.4 | $ | 922.9 | ||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | 348.7 | 348.1 | 306.4 | 1,029.6 | 903.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 7.8 | 7.6 | 8.2 | 21.0 | 20.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest income | 106.0 | 106.3 | 92.3 | 306.9 | 277.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest expense (1) | 281.4 | 278.4 | 241.3 | 837.0 | 733.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense | 165.5 | 168.4 | 149.2 | 478.5 | 427.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 135.1 | 133.2 | 117.0 | 383.0 | 335.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders (1) | 131.6 | 129.7 | 113.5 | 372.5 | 324.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Statistical Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin (2) | 3.12 | % | 3.12 | % | 3.15 | % | 3.14 | % | 3.10 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Return on average assets (1),(2) | 1.05 | 1.04 | 1.06 | 1.02 | 1.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Return on average common equity (2) | 7.7 | 7.7 | 8.0 | 7.5 | 7.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Return on average tangible common equity (1),(2) | 14.0 | 14.1 | 14.5 | 13.7 | 14.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Efficiency ratio (1) | 56.8 | 55.8 | 56.7 | 56.6 | 58.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common Share Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.33 | $ | 0.33 | $ | 0.97 | $ | 0.95 | ||||||||||||||||||||||||||||||||||||||||||||||
Diluted (1) | 0.33 | 0.33 | 0.33 | 0.96 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid per common share | 0.1775 | 0.1775 | 0.1750 | 0.5300 | 0.5225 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividend payout ratio (1) | 53.1 | % | 53.8 | % | 52.9 | % | 55.0 | % | 55.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Book value per common share (end of period) | $ | 17.54 | $ | 17.34 | $ | 16.69 | $ | 17.54 | $ | 16.69 | ||||||||||||||||||||||||||||||||||||||||||||||
Tangible book value per common share (end of period) (1) | 9.74 | 9.51 | 9.19 | 9.74 | 9.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock price: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High | 17.10 | 17.66 | 19.00 | 18.03 | 20.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Low | 13.81 | 15.24 | 16.95 | 13.81 | 16.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Close (end of period) | 15.64 | 16.78 | 17.12 | 15.64 | 17.12 |
As of and for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial Condition Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 52,072 | $ | 51,622 | $ | 48,092 | $ | 47,877 | $ | 44,133 | |||||||||||||||||||||||||||||||||||||||||||
Loans | 38,781 | 38,557 | 35,515 | 35,241 | 32,199 | ||||||||||||||||||||||||||||||||||||||||||||||||
Securities | 7,135 | 7,086 | 7,176 | 7,233 | 7,385 | ||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | 158 | 275 | 106 | 266 | 128 | ||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses | 246 | 244 | 241 | 240 | 238 | ||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other acquisition-related intangible assets | 3,065 | 3,073 | 2,897 | 2,866 | 2,569 | ||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 38,574 | 39,467 | 36,901 | 36,159 | 33,210 | ||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | 4,629 | 3,400 | 2,860 | 3,593 | 3,392 | ||||||||||||||||||||||||||||||||||||||||||||||||
Notes and debentures | 916 | 912 | 902 | 896 | 886 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 7,131 | 7,046 | 6,621 | 6,534 | 5,959 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total risk-weighted assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
People’s United | 39,794 | 39,026 | 36,466 | 35,910 | 33,181 | ||||||||||||||||||||||||||||||||||||||||||||||||
People’s United Bank, National Association | 39,742 | 38,976 | 36,447 | 35,875 | 33,132 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-performing assets (1) | 182 | 179 | 167 | 186 | 173 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loan charge-offs | 5.8 | 4.5 | 5.1 | 7.5 | 7.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Balances: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | $ | 38,317 | $ | 38,229 | $ | 35,046 | $ | 35,016 | $ | 32,166 | |||||||||||||||||||||||||||||||||||||||||||
Securities (2) | 7,041 | 7,147 | 7,311 | 7,479 | 7,404 | ||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | 219 | 214 | 203 | 292 | 193 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total earning assets | 45,577 | 45,591 | 42,560 | 42,786 | 39,763 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 51,524 | 51,088 | 47,800 | 47,721 | 44,245 | ||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 38,657 | 39,211 | 36,450 | 35,959 | 33,058 | ||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | 3,855 | 3,146 | 2,937 | 3,456 | 3,539 | ||||||||||||||||||||||||||||||||||||||||||||||||
Notes and debentures | 914 | 904 | 896 | 886 | 888 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total funding liabilities | 43,427 | 43,261 | 40,284 | 40,302 | 37,485 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 7,079 | 6,978 | 6,562 | 6,515 | 5,937 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loan charge-offs to average total loans (annualized) | 0.06 | % | 0.05 | % | 0.06 | % | 0.09 | % | 0.09 | % | |||||||||||||||||||||||||||||||||||||||||||
Non-performing assets to originated loans, real estate owned and repossessed assets (1) | 0.56 | 0.56 | 0.54 | 0.61 | 0.57 | ||||||||||||||||||||||||||||||||||||||||||||||||
Originated allowance for loan losses to: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Originated loans (1) | 0.75 | 0.76 | 0.76 | 0.77 | 0.78 | ||||||||||||||||||||||||||||||||||||||||||||||||
Originated non-performing loans (1) | 156.0 | 146.0 | 157.0 | 140.9 | 147.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average stockholders’ equity to average total assets | 13.7 | 13.7 | 13.7 | 13.7 | 13.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity to total assets | 13.7 | 13.6 | 13.8 | 13.6 | 13.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tangible common equity to tangible assets (3) | 7.8 | 7.7 | 7.7 | 7.6 | 7.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
People’s United | 12.0 | 12.0 | 12.4 | 12.5 | 12.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
People’s United Bank, National Association | 12.2 | 12.4 | 12.9 | 13.2 | 13.6 |
Non-GAAP Financial Measures and Reconciliation to |
|
As of and for the Three Months Ended | ||||||||||||||||||||
(dollars in millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | |||||||||||||||
Financial Condition Data: | ||||||||||||||||||||
Total assets | $ | 44,133 | $ | 44,575 | $ | 44,101 | $ | 44,453 | $ | 43,998 | ||||||||||
Loans | 32,199 | 32,512 | 32,104 | 32,575 | 32,384 | |||||||||||||||
Securities | 7,385 | 7,324 | 7,173 | 7,043 | 6,914 | |||||||||||||||
Short-term investments | 128 | 253 | 470 | 378 | 303 | |||||||||||||||
Allowance for loan losses | 238 | 237 | 235 | 234 | 233 | |||||||||||||||
Goodwill and other acquisition-related intangible assets | 2,569 | 2,574 | 2,555 | 2,560 | 2,568 | |||||||||||||||
Deposits | 33,210 | 32,468 | 32,894 | 33,056 | 32,547 | |||||||||||||||
Borrowings | 3,392 | 4,639 | 3,877 | 4,104 | 4,144 | |||||||||||||||
Notes and debentures | 886 | 889 | 892 | 902 | 906 | |||||||||||||||
Stockholders’ equity | 5,959 | 5,900 | 5,845 | 5,820 | 5,746 | |||||||||||||||
Total risk-weighted assets: | ||||||||||||||||||||
People’s United | 33,181 | 33,369 | 32,833 | 33,256 | 32,029 | |||||||||||||||
People’s United Bank, National Association | 33,132 | 33,317 | 32,784 | 33,202 | 32,981 | |||||||||||||||
Non-performing assets (1) | 173 | 187 | 174 | 168 | 191 | |||||||||||||||
Net loan charge-offs | 7.0 | 5.0 | 4.5 | 6.5 | 5.2 | |||||||||||||||
Average Balances: | ||||||||||||||||||||
Loans | $ | 32,166 | $ | 32,116 | $ | 32,096 | $ | 32,271 | $ | 31,994 | ||||||||||
Securities (2) | 7,404 | 7,302 | 7,186 | 7,022 | 6,559 | |||||||||||||||
Short-term investments | 193 | 267 | 366 | 361 | 347 | |||||||||||||||
Total earning assets | 39,763 | 39,685 | 39,648 | 39,654 | 38,900 | |||||||||||||||
Total assets | 44,245 | 44,110 | 44,011 | 44,039 | 43,256 | |||||||||||||||
Deposits | 33,058 | 32,535 | 32,824 | 32,879 | 32,065 | |||||||||||||||
Borrowings | 3,539 | 4,031 | 3,752 | 3,836 | 4,010 | |||||||||||||||
Notes and debentures | 888 | 890 | 895 | 904 | 909 | |||||||||||||||
Total funding liabilities | 37,485 | 37,456 | 37,471 | 37,619 | 36,984 | |||||||||||||||
Stockholders’ equity | 5,937 | 5,870 | 5,820 | 5,774 | 5,722 | |||||||||||||||
Ratios: | ||||||||||||||||||||
Net loan charge-offs to average total loans (annualized) | 0.09 | % | 0.06 | % | 0.06 | % | 0.08 | % | 0.06 | % | ||||||||||
Non-performing assets to originated loans, real estate owned and repossessed assets (1) | 0.57 | 0.62 | 0.58 | 0.56 | 0.64 | |||||||||||||||
Originated allowance for loan losses to: | ||||||||||||||||||||
Originated loans (1) | 0.78 | 0.77 | 0.78 | 0.77 | 0.77 | |||||||||||||||
Originatednon-performing loans (1) | 147.9 | 138.4 | 149.3 | 155.2 | 131.6 | |||||||||||||||
Average stockholders’ equity to average total assets | 13.4 | 13.3 | 13.2 | 13.1 | 13.2 | |||||||||||||||
Stockholders’ equity to total assets | 13.5 | 13.2 | 13.3 | 13.1 | 13.1 | |||||||||||||||
Tangible common equity to tangible assets (3) | 7.6 | 7.3 | 7.3 | 7.2 | 7.1 | |||||||||||||||
Total risk-based capital: | ||||||||||||||||||||
People’s United | 12.8 | 12.5 | 12.6 | 12.2 | 12.0 | |||||||||||||||
People’s United Bank, National Association | 13.6 | 13.4 | 12.9 | 12.6 | 12.6 |
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Non-GAAP Financial Measures and Reconciliation to GAAP
In addition to evaluating People’s United’s results of operations in accordance with U.S. generally accepted accounting principles (“GAAP”), management routinely supplements its evaluation with an analysis of certainnon-GAAP financial measures, such as the efficiency and tangible common equity ratios, tangible book value per common share and operating earnings metrics. Management believes thesenon-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, includingnon-interest expense control, while the tangible common equity ratio and tangible book value per common share are used to analyze the relative strength of People’s United’s capital position.
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(dollars in millions) | Sept. 30, 2018 | June 30, 2018 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | |||||||||||||||
Totalnon-interest expense | $ | 241.3 | $ | 248.6 | $ | 237.1 | $ | 733.4 | $ | 720.5 | ||||||||||
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Adjustments to arrive at operatingnon-interest expense: | ||||||||||||||||||||
Merger-related expenses | (0.5 | ) | (2.9 | ) | (3.0 | ) | (3.4 | ) | (29.0 | ) | ||||||||||
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Total | (0.5 | ) | (2.9 | ) | (3.0 | ) | (3.4 | ) | (29.0 | ) | ||||||||||
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Operatingnon-interest expense | 240.8 | 245.7 | 234.1 | 730.0 | 691.5 | |||||||||||||||
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Operating lease expense | (8.9 | ) | (8.7 | ) | (8.8 | ) | (26.6 | ) | (26.3 | ) | ||||||||||
Amortization of other acquisition-related intangible assets | (4.9 | ) | (4.9 | ) | (7.9 | ) | (14.9 | ) | (22.1 | ) | ||||||||||
Other (1) | (1.8 | ) | (1.7 | ) | (1.5 | ) | (4.8 | ) | (3.7 | ) | ||||||||||
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Totalnon-interest expense for efficiency ratio | $ | 225.2 | $ | 230.4 | $ | 215.9 | $ | 683.7 | $ | 639.4 | ||||||||||
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Net interest income (FTE basis) | $ | 313.0 | $ | 307.8 | $ | 295.8 | $ | 922.9 | $ | 839.1 | ||||||||||
Totalnon-interest income | 92.3 | 94.9 | 89.3 | 277.6 | 265.6 | |||||||||||||||
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Total revenues | 405.3 | 402.7 | 385.1 | 1,200.5 | 1,104.7 | |||||||||||||||
Adjustments: | ||||||||||||||||||||
Operating lease expense | (8.9 | ) | (8.7 | ) | (8.8 | ) | (26.6 | ) | (26.3 | ) | ||||||||||
BOLI FTE adjustment | 0.6 | 0.4 | 1.2 | 1.4 | 2.6 | |||||||||||||||
Net security (gains) losses | (0.1 | ) | — | — | (0.2 | ) | 15.6 | |||||||||||||
Other (2) | — | — | (0.2 | ) | — | — | ||||||||||||||
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Total revenues for efficiency ratio | $ | 396.9 | $ | 394.4 | $ | 377.3 | $ | 1,175.1 | $ | 1,096.6 | ||||||||||
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Efficiency ratio | 56.7 | % | 58.4 | % | 57.3 | % | 58.2 | % | 58.3 | % | ||||||||||
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Sept. 30, 2019 | June 30, 2019 | Sept. 30, 2018 | Sept. 30, 2019 | Sept. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||
Total non-interest expense | $ | 281.4 | $ | 278.4 | $ | 241.3 | $ | 837.0 | $ | 733.4 | |||||||||||||||||||||||||||||||||||||
Adjustments to arrive at operating non-interest expense: | |||||||||||||||||||||||||||||||||||||||||||||||
Merger-related expenses | (5.0) | (6.5) | (0.5) | (26.5) | (3.4) | ||||||||||||||||||||||||||||||||||||||||||
Total | (5.0) | (6.5) | (0.5) | (26.5) | (3.4) | ||||||||||||||||||||||||||||||||||||||||||
Operating non-interest expense | 276.4 | 271.9 | 240.8 | 810.5 | 730.0 | ||||||||||||||||||||||||||||||||||||||||||
Operating lease expense | (9.9) | (9.9) | (8.9) | (29.2) | (26.6) | ||||||||||||||||||||||||||||||||||||||||||
Amortization of other acquisition-related intangible assets | (8.0) | (8.0) | (4.9) | (22.7) | (14.9) | ||||||||||||||||||||||||||||||||||||||||||
Other (1) | (1.4) | (1.4) | (1.8) | (4.6) | (4.8) | ||||||||||||||||||||||||||||||||||||||||||
Total non-interest expense for efficiency ratio | $ | 257.1 | $ | 252.6 | $ | 225.2 | $ | 754.0 | $ | 683.7 | |||||||||||||||||||||||||||||||||||||
Net interest income (FTE basis) | $ | 356.0 | $ | 355.4 | $ | 313.0 | $ | 1,051.4 | $ | 922.9 | |||||||||||||||||||||||||||||||||||||
Total non-interest income | 106.0 | 106.3 | 92.3 | 306.9 | 277.6 | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | 462.0 | 461.7 | 405.3 | 1,358.3 | 1,200.5 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Operating lease expense | (9.9) | (9.9) | (8.9) | (29.2) | (26.6) | ||||||||||||||||||||||||||||||||||||||||||
BOLI FTE adjustment | 0.5 | 0.7 | 0.6 | 1.8 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||
Net security gains | — | (0.1) | (0.1) | (0.1) | (0.2) | ||||||||||||||||||||||||||||||||||||||||||
Other (2) | 0.1 | — | — | 0.4 | — | ||||||||||||||||||||||||||||||||||||||||||
Total revenues for efficiency ratio | $ | 452.7 | $ | 452.4 | $ | 396.9 | $ | 1,331.2 | $ | 1,175.1 | |||||||||||||||||||||||||||||||||||||
Efficiency ratio | 56.8 | % | 55.8 | % | 56.7 | % | 56.6 | % | 58.2 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(dollars in millions, except per common share data) | Sept. 30, 2018 | June 30, 2018 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | |||||||||||||||
Net income available to common shareholders | $ | 113.5 | $ | 106.7 | $ | 87.3 | $ | 324.6 | $ | 220.4 | ||||||||||
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Adjustments to arrive at operating earnings: | ||||||||||||||||||||
Merger-related expenses | 0.5 | 2.9 | 3.0 | 3.4 | 29.0 | |||||||||||||||
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Totalpre-tax adjustments | 0.5 | 2.9 | 3.0 | 3.4 | 29.0 | |||||||||||||||
Tax effect | (0.2 | ) | (0.6 | ) | (1.0 | ) | (0.8 | ) | (9.2 | ) | ||||||||||
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Total adjustments, net of tax | 0.3 | 2.3 | 2.0 | 2.6 | 19.8 | |||||||||||||||
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Operating earnings | $ | 113.8 | $ | 109.0 | $ | 89.3 | $ | 327.2 | $ | 240.2 | ||||||||||
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Diluted EPS, as reported | $ | 0.33 | $ | 0.31 | $ | 0.26 | $ | 0.94 | $ | 0.67 | ||||||||||
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Adjustments to arrive at operating EPS: | ||||||||||||||||||||
Merger-related expenses | — | 0.01 | — | 0.01 | 0.06 | |||||||||||||||
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Total adjustments per common share | — | 0.01 | — | 0.01 | 0.06 | |||||||||||||||
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Operating EPS | $ | 0.33 | $ | 0.32 | $ | 0.26 | $ | 0.95 | $ | 0.73 | ||||||||||
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Average total assets | $ | 44,245 | $ | 44,110 | $ | 43,256 | $ | 44,123 | $ | 42,091 | ||||||||||
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Operating return on average assets (annualized) | 1.03 | % | 0.99 | % | 0.83 | % | 0.99 | % | 0.76 | % | ||||||||||
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per common share data) | Sept. 30, 2019 | June 30, 2019 | Sept. 30, 2018 | Sept. 30, 2019 | Sept. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 131.6 | $ | 129.7 | $ | 113.5 | $ | 372.5 | $ | 324.6 | |||||||||||||||||||||||||||||||||||||
Adjustments to arrive at operating earnings: | |||||||||||||||||||||||||||||||||||||||||||||||
Merger-related expenses | 5.0 | 6.5 | 0.5 | 26.5 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||
Total pre-tax adjustments | 5.0 | 6.5 | 0.5 | 26.5 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||
Tax effect | (1.1) | (1.4) | (0.2) | (5.6) | (0.8) | ||||||||||||||||||||||||||||||||||||||||||
Total adjustments, net of tax | 3.9 | 5.1 | 0.3 | 20.9 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||
Operating earnings | $ | 135.5 | $ | 134.8 | $ | 113.8 | $ | 393.4 | $ | 327.2 | |||||||||||||||||||||||||||||||||||||
Diluted EPS, as reported | $ | 0.33 | $ | 0.33 | $ | 0.33 | $ | 0.96 | $ | 0.94 | |||||||||||||||||||||||||||||||||||||
Adjustments to arrive at operating EPS: | |||||||||||||||||||||||||||||||||||||||||||||||
Merger-related expenses | 0.01 | 0.01 | — | 0.05 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||
Total adjustments per common share | 0.01 | 0.01 | — | 0.05 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||
Operating EPS | $ | 0.34 | $ | 0.34 | $ | 0.33 | $ | 1.01 | $ | 0.95 | |||||||||||||||||||||||||||||||||||||
Average total assets | $ | 51,524 | $ | 51,088 | $ | 44,245 | $ | 50,151 | $ | 44,123 | |||||||||||||||||||||||||||||||||||||
Operating return on average assets (annualized) | 1.05 | % | 1.06 | % | 1.03 | % | 1.05 | % | 0.99 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(dollars in millions) | Sept. 30, 2018 | June 30, 2018 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | |||||||||||||||
Operating earnings | $ | 113.8 | $ | 109.0 | $ | 89.3 | $ | 327.2 | $ | 240.2 | ||||||||||
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Average stockholders’ equity | $ | 5,937 | $ | 5,870 | $ | 5,722 | $ | 5,876 | $ | 5,530 | ||||||||||
Less: Average preferred stock | 244 | 244 | 244 | 244 | 244 | |||||||||||||||
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Average common equity | 5,693 | 5,626 | 5,478 | 5,632 | 5,286 | |||||||||||||||
Less: Average goodwill and average other | 2,572 | 2,554 | 2,524 | 2,561 | 2,359 | |||||||||||||||
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Average tangible common equity | $ | 3,121 | $ | 3,072 | $ | 2,954 | $ | 3,071 | $ | 2,927 | ||||||||||
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Operating return on average tangible | 14.6 | % | 14.2 | % | 12.1 | % | 14.2 | % | 10.9 | % | ||||||||||
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Three Months Ended | Nine Months Ended | |||||||||||||||||||
(dollars in millions) | Sept. 30, 2018 | June 30, 2018 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | |||||||||||||||
Common dividends paid | $ | 60.0 | $ | 59.9 | $ | 58.3 | $ | 178.7 | $ | 169.3 | ||||||||||
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Operating earnings | $ | 113.8 | $ | 109.0 | $ | 89.3 | $ | 327.2 | $ | 240.2 | ||||||||||
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Operating common dividend payout ratio | 52.7 | % | 55.0 | % | 65.3 | % | 54.6 | % | 70.5 | % | ||||||||||
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Three Months Ended Nine Months Ended (dollars in millions) Sept. 30,
2019June 30,
2019Sept. 30,
2018Sept. 30,
2019Sept. 30,
2018Operating earnings $ 135.5 $ 134.8 $ 113.8 $ 393.4 $ 327.2 Average stockholders’ equity $ 7,079 $ 6,978 $ 5,937 $ 6,875 $ 5,876 Less: Average preferred stock 244 244 244 244 244 Average common equity $ 6,835 $ 6,734 $ 5,693 $ 6,631 $ 5,632 3,069 3,043 2,572 3,005 2,561 Average tangible common equity $ 3,766 $ 3,691 $ 3,121 $ 3,626 $ 3,071 14.4 % 14.6 % 14.6 % 14.5 % 14.2 % Three Months Ended Nine Months Ended (dollars in millions) Sept. 30,
2019June 30,
2019Sept. 30,
2018Sept. 30,
2019Sept. 30,
2018Common dividends paid $ 69.9 $ 69.8 $ 60.0 $ 204.9 $ 178.7 Operating earnings $ 135.5 $ 134.8 $ 113.8 $ 393.4 $ 327.2 Operating common dividend payout ratio 51.6 % 51.8 % 52.7 % 52.1 % 54.6 %
(dollars in millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | |||||||||||||||
Total stockholders’ equity | $ | 5,959 | $ | 5,900 | $ | 5,845 | $ | 5,820 | $ | 5,746 | ||||||||||
Less: Preferred stock | 244 | 244 | 244 | 244 | 244 | |||||||||||||||
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Common equity | 5,715 | 5,656 | 5,601 | 5,576 | 5,502 | |||||||||||||||
Less: Goodwill and other acquisition-related intangible assets | 2,569 | 2,574 | 2,555 | 2,560 | 2,568 | |||||||||||||||
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Tangible common equity | $ | 3,146 | $ | 3,082 | $ | 3,046 | $ | 3,016 | $ | 2,934 | ||||||||||
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Total assets | $ | 44,133 | $ | 44,575 | $ | 44,101 | $ | 44,453 | $ | 43,998 | ||||||||||
Less: Goodwill and other acquisition-related intangible assets | 2,569 | 2,574 | 2,555 | 2,560 | 2,568 | |||||||||||||||
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Tangible assets | $ | 41,564 | $ | 42,001 | $ | 41,546 | $ | 41,893 | $ | 41,430 | ||||||||||
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Tangible common equity ratio | 7.6 | % | 7.3 | % | 7.3 | % | 7.2 | % | 7.1 | % | ||||||||||
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(in millions, except per common share data) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | |||||||||||||||
Tangible common equity | $ | 3,146 | $ | 3,082 | $ | 3,046 | $ | 3,016 | $ | 2,934 | ||||||||||
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Common shares issued | 437.74 | 437.06 | 436.56 | 435.64 | 433.59 | |||||||||||||||
Less: Common shares classified as treasury shares | 89.02 | 89.02 | 89.02 | 89.04 | 89.04 | |||||||||||||||
Unallocated ESOP common shares | 6.36 | 6.45 | 6.53 | 6.62 | 6.71 | |||||||||||||||
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Common shares | 342.36 | 341.59 | 341.01 | 339.98 | 337.84 | |||||||||||||||
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Tangible book value per common share | $ | 9.19 | $ | 9.02 | $ | 8.93 | $ | 8.87 | $ | 8.68 | ||||||||||
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(dollars in millions) | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total stockholders’ equity | $ | 7,131 | $ | 7,046 | $ | 6,621 | $ | 6,534 | $ | 5,959 | ||||||||||||||||||||||||||||||||||||||||||||||
Less: Preferred stock | 244 | 244 | 244 | 244 | 244 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common equity | 6,887 | 6,802 | 6,377 | 6,290 | 5,715 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Goodwill and other acquisition-related intangible assets | 3,065 | 3,073 | 2,896 | 2,866 | 2,569 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible common equity | $ | 3,822 | $ | 3,729 | $ | 3,481 | $ | 3,424 | $ | 3,146 | ||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 52,072 | $ | 51,622 | $ | 48,092 | $ | 47,877 | $ | 44,133 | ||||||||||||||||||||||||||||||||||||||||||||||
Less: Goodwill and other acquisition-related intangible assets | 3,065 | 3,073 | 2,896 | 2,866 | 2,569 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible assets | $ | 49,007 | $ | 48,549 | $ | 45,196 | $ | 45,011 | $ | 41,564 | ||||||||||||||||||||||||||||||||||||||||||||||
Tangible common equity ratio | 7.8 | % | 7.7 | % | 7.7 | % | 7.6 | % | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||
(in millions, except per common share data) | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible common equity | $ | 3,822 | $ | 3,729 | $ | 3,481 | $ | 3,424 | $ | 3,146 | ||||||||||||||||||||||||||||||||||||||||||||||
Common shares issued | 487.59 | 487.35 | 467.38 | 466.32 | 437.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Common shares classified as treasury shares | 89.01 | 89.01 | 89.01 | 89.03 | 89.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unallocated ESOP common shares | 6.01 | 6.10 | 6.19 | 6.27 | 6.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common shares | 392.57 | 392.24 | 372.18 | 371.02 | 342.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible book value per common share | $ | 9.74 | $ | 9.51 | $ | 9.35 | $ | 9.23 | $ | 9.19 |
Financial Overview |
data for prior periods has not been restated to include these acquisitions and therefore, are not directly comparable to subsequent periods.
Segment Results
Segment Results |
The Company’s operating segments have been aggregated into two reportable segments: Commercial Banking and Retail Banking. These reportable segments have been identified and organized based on the nature of the underlying products and services applicable to each segment, the type of customers to whom those products and services are offered and the distribution channel through which those products and services are made available. With respect to the Company’s traditional wealth management activities, this presentation results in the allocation of the Company’s insurance business and certain trust activities to the Commercial Banking segment, and the allocation of the Company’s brokerage business and certain other trust activities to the Retail Banking segment.
Entities have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of such events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity is not required to perform thetwo-step quantitative impairment test.test as described below. In conducting its 20172018 goodwill impairment evaluation (as of the annual October 1st1st evaluation date), People’s United elected to perform thisthe optional qualitative assessment for both the Commercial Banking and Retail Bankingall three reporting units, and, upon doing so, concluded that performance of thetwo-step quantitative impairment test was not required. Thetwo-step impairment test was elected for purposes of the 2017 goodwill impairment evaluation for the Wealth Management reporting unit as a result of the acquisition of Gerstein, Fisher & Associates, Inc., which occurred subsequent to performance of the Company’s 2016 impairment analysis.
When performed, the goodwill impairment analysis is atwo-step test.
Segment Performance Summary
Three months ended September 30, 2018 (in millions) | Commercial Banking | Retail Banking | Total Reportable Segments | Treasury | Other | Total Consolidated | ||||||||||||||||||
Net interest income (loss) | $ | 176.9 | $ | 115.3 | $ | 292.2 | $ | 20.0 | $ | (5.8 | ) | $ | 306.4 | |||||||||||
Provision for loan losses | 9.8 | 2.2 | 12.0 | — | (3.8 | ) | 8.2 | |||||||||||||||||
Totalnon-interest income | 42.9 | 46.7 | 89.6 | 2.6 | 0.1 | 92.3 | ||||||||||||||||||
Totalnon-interest expense | 93.8 | 138.0 | 231.8 | 4.6 | 4.9 | 241.3 | ||||||||||||||||||
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Income (loss) before income tax expense (benefit) | 116.2 | 21.8 | 138.0 | 18.0 | (6.8 | ) | 149.2 | |||||||||||||||||
Income tax expense (benefit) | 25.1 | 4.7 | 29.8 | 3.9 | (1.5 | ) | 32.2 | |||||||||||||||||
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Net income (loss) | $ | 91.1 | $ | 17.1 | $ | 108.2 | $ | 14.1 | $ | (5.3 | ) | $ | 117.0 | |||||||||||
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Average total assets | $ | 25,632.3 | $ | 9,669.0 | $ | 35,301.3 | $ | 7,934.1 | $ | 1,009.2 | $ | 44,244.6 | ||||||||||||
Average total liabilities | 9,068.4 | 20,101.3 | 29,169.7 | 8,669.9 | 468.4 | 38,308.0 | ||||||||||||||||||
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Nine months ended September 30, 2018 (in millions) | Commercial Banking | Retail Banking | Total Reportable Segments | Treasury | Other | Total Consolidated | ||||||||||||||||||
Net interest income (loss) | $ | 515.9 | $ | 334.3 | $ | 850.2 | $ | 69.5 | $ | (16.3 | ) | $ | 903.4 | |||||||||||
Provision for loan losses | 28.4 | 6.6 | 35.0 | — | (14.9 | ) | 20.1 | |||||||||||||||||
Totalnon-interest income | 130.3 | 138.5 | 268.8 | 7.4 | 1.4 | 277.6 | ||||||||||||||||||
Totalnon-interest expense | 282.5 | 417.3 | 699.8 | 14.0 | 19.6 | 733.4 | ||||||||||||||||||
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Income (loss) before income tax expense (benefit) | 335.3 | 48.9 | 384.2 | 62.9 | (19.6 | ) | 427.5 | |||||||||||||||||
Income tax expense (benefit) | 72.4 | 10.6 | 83.0 | 13.6 | (4.2 | ) | 92.4 | |||||||||||||||||
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Net income (loss) | $ | 262.9 | $ | 38.3 | $ | 301.2 | $ | 49.3 | $ | (15.4 | ) | $ | 335.1 | |||||||||||
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Average total assets | $ | 25,542.9 | $ | 9,710.6 | $ | 35,253.5 | $ | 7,912.0 | $ | 957.2 | $ | 44,122.7 | ||||||||||||
Average total liabilities | 9,137.2 | 20,150.7 | 29,287.9 | 8,540.8 | 418.0 | 38,246.7 | ||||||||||||||||||
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Segment Performance Summary |
Three months ended September 30, 2019 | Commercial Banking | Retail Banking | Total Reportable Segments | Treasury | Other | Total Consolidated | ||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net interest income (loss) | $ | 200.7 | $ | 136.9 | $ | 337.6 | $ | 15.0 | $ | (3.9) | $ | 348.7 | ||||||||||||||||||||||||||
Provision for loan losses | 11.3 | 2.3 | 13.6 | — | (5.8) | 7.8 | ||||||||||||||||||||||||||||||||
Total non-interest income | 53.2 | 49.7 | 102.9 | 2.9 | 0.2 | 106.0 | ||||||||||||||||||||||||||||||||
Total non-interest expense | 111.6 | 150.0 | 261.6 | 2.4 | 17.4 | 281.4 | ||||||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 131.0 | 34.3 | 165.3 | 15.5 | (15.3) | 165.5 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 24.1 | 6.3 | 30.4 | 2.9 | (2.9) | 30.4 | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | 106.9 | $ | 28.0 | $ | 134.9 | $ | 12.6 | $ | (12.4) | $ | 135.1 | ||||||||||||||||||||||||||
Average total assets | $ | 29,886.6 | $ | 12,410.2 | $ | 42,296.8 | $ | 7,686.1 | $ | 1,541.4 | $ | 51,524.3 | ||||||||||||||||||||||||||
Average total liabilities | 11,397.3 | 23,066.4 | 34,463.7 | 9,329.5 | 652.5 | 44,445.7 |
Nine months ended September 30, 2019 | Commercial Banking | Retail Banking | Total Reportable Segments | Treasury | Other | Total Consolidated | ||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net interest income (loss) | $ | 577.5 | $ | 405.4 | $ | 982.9 | $ | 58.7 | $ | (12.0) | $ | 1,029.6 | ||||||||||||||||||||||||||
Provision for loan losses | 32.6 | 6.7 | 39.3 | — | (18.3) | 21.0 | ||||||||||||||||||||||||||||||||
Total non-interest income | 151.4 | 144.2 | 295.6 | 9.2 | 2.1 | 306.9 | ||||||||||||||||||||||||||||||||
Total non-interest expense | 330.1 | 445.7 | 775.8 | 11.3 | 49.9 | 837.0 | ||||||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 366.2 | 97.2 | 463.4 | 56.6 | (41.5) | 478.5 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 73.1 | 19.4 | 92.5 | 11.4 | (8.4) | 95.5 | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | 293.1 | $ | 77.8 | $ | 370.9 | $ | 45.2 | $ | (33.1) | $ | 383.0 | ||||||||||||||||||||||||||
Average total assets | $ | 28,800.9 | $ | 12,120.7 | $ | 40,921.6 | $ | 7,784.2 | $ | 1,445.2 | $ | 50,151.0 | ||||||||||||||||||||||||||
Average total liabilities | 10,839.6 | 22,982.5 | 33,822.1 | 8,788.0 | 666.0 | 43,276.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net interest income | $ | 176.9 | $ | 164.5 | $ | 515.9 | $ | 459.0 | ||||||||
Provision for loan losses | 9.8 | 11.5 | 28.4 | 31.6 | ||||||||||||
Totalnon-interest income | 42.9 | 40.1 | 130.3 | 121.4 | ||||||||||||
Totalnon-interest expense | 93.8 | 90.8 | 282.5 | 262.7 | ||||||||||||
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Income before income tax expense | 116.2 | 102.3 | 335.3 | 286.1 | ||||||||||||
Income tax expense | 25.1 | 30.7 | 72.4 | 88.9 | ||||||||||||
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Net income | $ | 91.1 | $ | 71.6 | $ | 262.9 | $ | 197.2 | ||||||||
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Average total assets | $ | 25,632.3 | $ | 25,307.8 | $ | 25,542.9 | $ | 21,183.0 | ||||||||
Average total liabilities | 9,068.4 | 8,121.0 | 9,137.2 | 7,578.0 | ||||||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net interest income | $ | 200.7 | $ | 176.9 | $ | 577.5 | $ | 515.9 | |||||||||||||||||||||||||||
Provision for loan losses | 11.3 | 9.8 | 32.6 | 28.4 | |||||||||||||||||||||||||||||||
Total non-interest income | 53.2 | 42.9 | 151.4 | 130.3 | |||||||||||||||||||||||||||||||
Total non-interest expense | 111.6 | 93.8 | 330.1 | 282.5 | |||||||||||||||||||||||||||||||
Income before income tax expense | 131.0 | 116.2 | 366.2 | 335.3 | |||||||||||||||||||||||||||||||
Income tax expense | 24.1 | 25.1 | 73.1 | 72.4 | |||||||||||||||||||||||||||||||
Net income | $ | 106.9 | $ | 91.1 | $ | 293.1 | $ | 262.9 | |||||||||||||||||||||||||||
Average total assets | $ | 29,886.6 | $ | 25,632.3 | $ | 28,800.9 | $ | 25,542.9 | |||||||||||||||||||||||||||
Average total liabilities | 11,397.3 | 9,068.4 | 10,839.6 | 9,137.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net interest income | $ | 115.3 | $ | 105.0 | $ | 334.3 | $ | 298.7 | ||||||||
Provision for loan losses | 2.2 | 3.4 | 6.6 | 10.0 | ||||||||||||
Totalnon-interest income | 46.7 | 46.9 | 138.5 | 136.5 | ||||||||||||
Totalnon-interest expense | 138.0 | 136.1 | 417.3 | 405.8 | ||||||||||||
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Income before income tax expense | 21.8 | 12.4 | 48.9 | 19.4 | ||||||||||||
Income tax expense | 4.7 | 3.8 | 10.6 | 6.1 | ||||||||||||
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Net income | $ | 17.1 | $ | 8.6 | $ | 38.3 | $ | 13.3 | ||||||||
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Average total assets | $ | 9,669.0 | $ | 9,776.6 | $ | 9,710.6 | $ | 9,661.3 | ||||||||
Average total liabilities | 20,101.3 | 20,539.7 | 20,150.7 | 20,184.4 | ||||||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net interest income | $ | 136.9 | $ | 115.3 | $ | 405.4 | $ | 334.3 | |||||||||||||||||||||||||||
Provision for loan losses | 2.3 | 2.2 | 6.7 | 6.6 | |||||||||||||||||||||||||||||||
Total non-interest income | 49.7 | 46.7 | 144.2 | 138.5 | |||||||||||||||||||||||||||||||
Total non-interest expense | 150.0 | 138.0 | 445.7 | 417.3 | |||||||||||||||||||||||||||||||
Income before income tax expense | 34.3 | 21.8 | 97.2 | 48.9 | |||||||||||||||||||||||||||||||
Income tax expense | 6.3 | 4.7 | 19.4 | 10.6 | |||||||||||||||||||||||||||||||
Net income | $ | 28.0 | $ | 17.1 | $ | 77.8 | $ | 38.3 | |||||||||||||||||||||||||||
Average total assets | $ | 12,410.2 | $ | 9,669.0 | $ | 12,120.7 | $ | 9,710.6 | |||||||||||||||||||||||||||
Average total liabilities | 23,066.4 | 20,101.3 | 22,982.5 | 20,150.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net interest income | $ | 20.0 | $ | 26.4 | $ | 69.5 | $ | 80.5 | ||||||||
Totalnon-interest income | 2.6 | 3.1 | 7.4 | 8.2 | ||||||||||||
Totalnon-interest expense | 4.6 | 4.4 | 14.0 | 11.2 | ||||||||||||
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Income before income tax expense | 18.0 | 25.1 | 62.9 | 77.5 | ||||||||||||
Income tax expense | 3.9 | 7.5 | 13.6 | 24.1 | ||||||||||||
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Net income | $ | 14.1 | $ | 17.6 | $ | 49.3 | $ | 53.4 | ||||||||
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Average total assets | $ | 7,934.1 | $ | 7,293.4 | $ | 7,912.0 | $ | 7,427.7 | ||||||||
Average total liabilities | 8,669.9 | 8,485.3 | 8,540.8 | 8,411.4 | ||||||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net interest income | $ | 15.0 | $ | 20.0 | $ | 58.7 | $ | 69.5 | |||||||||||||||||||||||||||
Total non-interest income | 2.9 | 2.6 | 9.2 | 7.4 | |||||||||||||||||||||||||||||||
Total non-interest expense | 2.4 | 4.6 | 11.3 | 14.0 | |||||||||||||||||||||||||||||||
Income before income tax expense | 15.5 | 18.0 | 56.6 | 62.9 | |||||||||||||||||||||||||||||||
Income tax expense | 2.9 | 3.9 | 11.4 | 13.6 | |||||||||||||||||||||||||||||||
Net income | $ | 12.6 | $ | 14.1 | $ | 45.2 | $ | 49.3 | |||||||||||||||||||||||||||
Average total assets | $ | 7,686.1 | $ | 7,934.1 | $ | 7,784.2 | $ | 7,912.0 | |||||||||||||||||||||||||||
Average total liabilities | 9,329.5 | 8,669.9 | 8,788.0 | 8,540.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net interest loss | $ | (5.8 | ) | $ | (11.3 | ) | $ | (16.3 | ) | $ | (30.1 | ) | ||||
Provision for loan losses | (3.8 | ) | (7.9 | ) | (14.9 | ) | (23.1 | ) | ||||||||
Totalnon-interest income | 0.1 | (0.8 | ) | 1.4 | (0.5 | ) | ||||||||||
Totalnon-interest expense | 4.9 | 5.8 | 19.6 | 40.8 | ||||||||||||
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Loss before income tax benefit | (6.8 | ) | (10.0 | ) | (19.6 | ) | (48.3 | ) | ||||||||
Income tax benefit | (1.5 | ) | (3.0 | ) | (4.2 | ) | (15.3 | ) | ||||||||
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Net loss | $ | (5.3 | ) | $ | (7.0 | ) | $ | (15.4 | ) | $ | (33.0 | ) | ||||
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Average total assets | $ | 1,009.2 | $ | 878.6 | $ | 957.2 | $ | 818.6 | ||||||||
Average total liabilities | 468.4 | 388.2 | 418.0 | 386.7 | ||||||||||||
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Net Interest Income
accounting for leases).
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Net interest loss | $ | (3.9) | $ | (5.8) | $ | (12.0) | $ | (16.3) | |||||||||||||||||||||||||||
Provision for loan losses | (5.8) | (3.8) | (18.3) | (14.9) | |||||||||||||||||||||||||||||||
Total non-interest income | 0.2 | 0.1 | 2.1 | 1.4 | |||||||||||||||||||||||||||||||
Total non-interest expense | 17.4 | 4.9 | 49.9 | 19.6 | |||||||||||||||||||||||||||||||
Loss before income tax benefit | (15.3) | (6.8) | (41.5) | (19.6) | |||||||||||||||||||||||||||||||
Income tax benefit | (2.9) | (1.5) | (8.4) | (4.2) | |||||||||||||||||||||||||||||||
Net loss | $ | (12.4) | $ | (5.3) | $ | (33.1) | $ | (15.4) | |||||||||||||||||||||||||||
Average total assets | $ | 1,541.4 | $ | 1,009.2 | $ | 1,445.2 | $ | 957.2 | |||||||||||||||||||||||||||
Average total liabilities | 652.5 | 468.4 | 666.0 | 418.0 |
Net Interest Income |
In response to continued signs of a moderately expanding U.S. economy, the
2018
as well as organic growth.
floating rate loans.
2019
Average total funding liabilities increased $29 million from the second quarter of 2018,2019, primarily reflecting a $522$709 million increase in average total deposits,borrowings, partially offset by a $493$553 million decrease in average total borrowings.
deposits reflecting in part, the expected withdrawal of a $500 million short-term commercial deposit during the third quarter of 2019.
Average Balance Sheet, Interest and Yield/Rate Analysis (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended (dollars in millions) | Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | $ | 218.7 | $ | 1.3 | 2.33 | % | $ | 214.1 | $ | 1.2 | 2.21 | % | $ | 192.5 | $ | 1.1 | 2.06 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities (2) | 7,041.3 | 49.4 | 2.80 | 7,147.1 | 50.8 | 2.85 | 7,404.2 | 50.8 | 2.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 12,194.8 | 136.6 | 4.48 | 12,323.2 | 139.9 | 4.54 | 10,641.4 | 114.7 | 4.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | 10,059.2 | 116.0 | 4.61 | 9,638.2 | 114.1 | 4.74 | 8,584.8 | 95.6 | 4.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment financing | 4,640.6 | 65.3 | 5.63 | 4,510.8 | 62.8 | 5.56 | 4,120.8 | 56.2 | 5.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 9,392.7 | 84.9 | 3.62 | 9,672.6 | 85.6 | 3.54 | 6,887.3 | 56.2 | 3.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity and other consumer | 2,029.2 | 24.7 | 4.88 | 2,084.6 | 25.7 | 4.94 | 1,931.8 | 22.0 | 4.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | 38,316.5 | 427.5 | 4.46 | 38,229.4 | 428.1 | 4.48 | 32,166.1 | 344.7 | 4.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total earning assets | 45,576.5 | $ | 478.2 | 4.20 | % | 45,590.6 | $ | 480.1 | 4.21 | % | 39,762.8 | $ | 396.6 | 3.99 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 5,947.8 | 5,496.9 | 4,481.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 51,524.3 | $ | 51,087.5 | $ | 44,244.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing | $ | 8,777.3 | $ | — | — | % | $ | 8,605.6 | $ | — | — | % | $ | 8,025.2 | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings, interest-bearing checking and money market | 21,758.5 | 53.4 | 0.98 | 22,341.3 | 57.4 | 1.03 | 19,031.4 | 32.6 | 0.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time | 8,121.6 | 38.8 | 1.91 | 8,263.8 | 39.2 | 1.90 | 6,001.3 | 24.3 | 1.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total deposits | 38,657.4 | 92.2 | 0.95 | 39,210.7 | 96.6 | 0.99 | 33,057.9 | 56.9 | 0.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank advances | 2,363.0 | 14.1 | 2.39 | 1,844.0 | 12.2 | 2.64 | 2,560.6 | 14.0 | 2.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds purchased | 1,202.3 | 6.8 | 2.26 | 1,057.8 | 6.7 | 2.53 | 722.7 | 3.8 | 2.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer repurchase agreements | 290.1 | 0.6 | 0.86 | 240.0 | 0.4 | 0.77 | 234.3 | 0.3 | 0.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other borrowings | — | — | — | 4.3 | — | 0.64 | 20.9 | 0.1 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total borrowings | 3,855.4 | 21.5 | 2.23 | 3,146.1 | 19.3 | 2.46 | 3,538.5 | 18.2 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and debentures | 913.8 | 8.5 | 3.73 | 903.8 | 8.8 | 3.89 | 888.3 | 8.5 | 3.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total funding liabilities | 43,426.6 | $ | 122.2 | 1.13 | % | 43,260.6 | $ | 124.7 | 1.15 | % | 37,484.7 | $ | 83.6 | 0.89 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 1,019.1 | 848.8 | 823.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 44,445.7 | 44,109.4 | 38,308.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 7,078.6 | 6,978.1 | 5,936.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 51,524.3 | $ | 51,087.5 | $ | 44,244.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income/spread (3) | $ | 356.0 | 3.07 | % | $ | 355.4 | 3.06 | % | $ | 313.0 | 3.10 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin | 3.12 | % | 3.12 | % | 3.15 | % |
Average Balance Sheet, Interest and Yield/Rate Analysis (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2019 | September 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended (dollars in millions) | Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | $ | 211.9 | $ | 3.8 | 2.37 | % | $ | 274.6 | $ | 3.6 | 1.74 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities (2) | 7,165.4 | 152.6 | 2.84 | 7,298.3 | 148.0 | 2.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 12,037.6 | 409.2 | 4.53 | 10,791.8 | 333.2 | 4.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | 9,561.1 | 336.6 | 4.69 | 8,521.2 | 272.8 | 4.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment financing | 4,504.1 | 187.0 | 5.54 | 3,972.6 | 155.6 | 5.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 9,077.5 | 241.5 | 3.55 | 6,859.5 | 166.6 | 3.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity and other consumer | 2,029.1 | 75.4 | 4.95 | 1,981.1 | 64.2 | 4.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | 37,209.4 | 1,249.7 | 4.48 | 32,126.2 | 992.4 | 4.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total earning assets | 44,586.7 | $ | 1,406.1 | 4.20 | % | 39,699.1 | $ | 1,144.0 | 3.84 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 5,564.3 | 4,423.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 50,151.0 | $ | 44,122.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing | $ | 8,563.2 | $ | — | — | % | $ | 7,899.0 | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings, interest-bearing checking and money market | 21,708.6 | 159.6 | 0.98 | 19,296.0 | 85.7 | 0.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time | 7,842.4 | 110.4 | 1.88 | 5,611.6 | 59.8 | 1.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total deposits | 38,114.2 | 270.0 | 0.94 | 32,806.6 | 145.5 | 0.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank advances | 2,034.1 | 38.7 | 2.54 | 2,748.6 | 39.7 | 1.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds purchased | 1,005.6 | 18.2 | 2.41 | 655.6 | 9.1 | 1.85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer repurchase agreements | 272.1 | 1.6 | 0.76 | 241.7 | 0.6 | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other borrowings | 4.4 | 0.1 | 1.86 | 127.1 | 1.5 | 1.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total borrowings | 3,316.2 | 58.6 | 2.35 | 3,773.0 | 50.9 | 1.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and debentures | 904.7 | 26.1 | 3.85 | 891.0 | 24.7 | 3.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total funding liabilities | 42,335.1 | $ | 354.7 | 1.12 | % | 37,470.6 | $ | 221.1 | 0.79 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 941.0 | 776.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 43,276.1 | 38,246.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 6,874.9 | 5,876.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 50,151.0 | $ | 44,122.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income/spread (3) | $ | 1,051.4 | 3.08 | % | $ | 922.9 | 3.05 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin | 3.14 | % | 3.10 | % |
Volume and Rate Analysis
The following tables
75
76
Totalnon-interest income in the third quarter of The increase in bank service charges in the third quarter of 2019 compared to both the year-ago period and the second quarter of 2019 primarily reflects higher interchange-related fees and benefits from recent acquisitions. The 2018. The increase in insurance revenue The On an FTE basis, BOLI income totaled $2.7 million in the third quarter of
77
Totalnon-interest expense in the third quarter of non-interest expense, partially offset by decreases in compensation and benefit costs and regulatory assessments. As compared to the second quarter of
The year-over-year increase in compensation and benefits primarily reflects The 2019. The increase in occupancy and equipment expense in the third quarter of 78 Regulatory assessments include Federal Deposit Insurance Corporation (“FDIC”) insurance premiums, The FDIC issued a final rule effective on July 1, 2016 that implemented a Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provision requiring banks with over $10 billion in assets to be responsible for recapitalizing the Deposit Insurance Fund (the "DIF") to 1.35% of insured deposits after it reaches a 1.15% reserve ratio. For banks with over $10 billion in assets, the rule imposes a 4.5 basis point surcharge bringing the DIF’s reserve ratio to 1.35% by September 2020. For the surcharge only, the assessment base would be reduced by $10 billion. In November 2018, the FDIC announced that the DIF’s reserve ratio had exceeded the 1.35% minimum reserve ratio. As such, beginning in the fourth quarter of 2018, banks with over $10 billion in assets, are no longer subject to the surcharge. The decrease in regulatory assessments in the third quarter of 2019 compared to third quarter of 2018 primarily reflects a credit received from the FDIC in the third quarter of 2019 as well as the benefit of eliminating the FDIC surcharge in the fourth quarter of 2018. The benefit for the full-year of 2019 associated with the elimination of the surcharge is expected to be approximately $12 million. The decrease in regulatory assessments compared to the second quarter of 2019 primarily reflects the aforementioned credit. The increase in amortization of other acquisition-related intangible assets expense in the third quarter of 2019 compared to the year-ago period reflects the effect of additional intangible assets resulting from recent acquisitions. Scheduled amortization expense attributable to other acquisition-related intangible assets for the full-year of 2024. The increase in advertising and promotion expense in the third quarter of
one-time operational matters.
People’s United’s effective income tax rate was FINANCIAL CONDITION
Total assets at September 30, The fair value of the loans acquired in the BSB Bancorp acquisition totaled $2.6 billion. The increase in other assets primarily reflects the recognition of ROU assets related to the Company's adoption of the FASB's leasing standard on January 1, 2019. The decrease in total securities primarily reflects principal repayments and maturities of government sponsored enterprise mortgage-backed securities, partially offset by net purchases of municipal bonds and an $83 million decrease in the unrealized loss on debt securities available-for-sale. 79 Non-performing assets (excluding acquirednon-performing loans) totaled 2018. At September 30, other liabilities primarily reflects the recognition of operating lease liabilities related to the Company's adoption of the FASB's leasing standard on January 1, 2019. People’s United’s total stockholders’ equity was People’s United’s (consolidated) Tier 1 Leverage capital ratio and its Common Equity Tier 1 (“CET 1”), Tier 1 and Total risk-based capital ratios were 8.7%,
People’s United’s lending activities consist of originating loans secured by commercial and residential properties, and extending secured and unsecured loans to commercial and consumer customers. The following tables summarize People’s United’s loan portfolios: Commercial Real Estate
80 Commercial and Industrial
Equipment Financing
Residential Mortgage
81 Home Equity and Other Consumer
While People’s United continues to adhere to prudent underwriting standards, the loan portfolio is not immune to potential negative consequences arising as a result of general economic weakness and, in particular, a prolonged downturn in the housing market on a national scale. Decreases in real estate values could adversely affect the value of property used as collateral for loans. In addition, adverse changes in the economy could have a negative effect on the ability of borrowers to make scheduled loan payments, which would likely have an adverse impact on earnings. Further, an increase in loan delinquencies may serve to decrease interest income and adversely impact loan loss experience, resulting in an increased provision and allowance for loan losses. People’s United actively manages asset quality through its underwriting practices and collection operations. Underwriting practices tend to focus on optimizing the return of a given risk classification while collection operations focus on minimizing losses once an account becomes delinquent. People’s United attempts to minimize losses associated with commercial loans by requiring borrowers to pledge adequate collateral and/or provide for third-party guarantees. Loss mitigation within the residential mortgage loan portfolio is highly dependent on the value of the underlying real estate. Certain loans whose terms have been modified are considered troubled debt restructurings (“TDRs”). Purchased credit impaired (“PCI”) loans (see Note Guidance issued by the Office of the Comptroller of the Currency requires that loans subject to a borrower’s discharge from personal liability following a Chapter 7 bankruptcy be treated as TDRs, included innon-performing loans and written down to the estimated collateral value, regardless of delinquency status. Included in TDRs at September 30, TDRs may either be accruing or placed onnon-accrual status (and reported asnon-performing loans) depending upon the loan’s specific circumstances, including the nature and extent of the related modifications. TDRs onnon-accrual status remain classified as such until the loan qualifies for return to accrual status. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months in the case of a commercial loan or, in the case of a retail loan, when the loan is less than 90 days past due. Loans may continue to be reported as TDRs after they are returned to accrual status. During the nine months ended September 30, 82 Portfolio Risk Elements – Residential Mortgage Lending People’s United does not actively engage in subprime mortgage lending that has, historically, been the riskiest sector of the residential housing market. People’s United has virtually no exposure to subprime loans, or to similarly high-riskAlt-A loans and structured investment vehicles. While no standard definition of “subprime” exists within the industry, the Company has generally defined subprime as borrowers with credit scores of 660 or less, either at or subsequent to origination. At September 30, Updated estimates of property values are obtained from an independent third-party for residential mortgage loans 90 days past due. At September 30, The Company continues to monitor its foreclosure policies and procedures to ensure ongoing compliance with applicable industry standards. We believe that our established procedures for reviewing foreclosure affidavits and validating information contained in related loan documentation are sound and consistently applied, and that our foreclosure affidavits are accurate. As a result, People’s United has not found it necessary to interrupt or suspend foreclosure proceedings. We have also considered the effect of representations and warranties that we made to third-party investors in connection with whole loan sales, and believe our representations and warranties were true and correct and do not expose the Company to any material loss. During the nine months ended September 30, 2019. The aforementioned foreclosure issues and the potential for additional legal and regulatory action could impact future foreclosure activities, including lengthening the time required for residential mortgage lenders, including the Bank, to initiate and complete the foreclosure process. In recent years, foreclosure timelines have increased as a result of, among other reasons: (i) delays associated with the significant increase in the number of foreclosure cases as a result of current economic conditions; (ii) additional consumer protection initiatives related to the foreclosure process; and (iii) voluntary and/or mandatory programs intended to permit or require lenders to consider loan modifications or other alternatives to foreclosure. Further increases in the foreclosure timeline may have an adverse effect on collateral values and our ability to minimize losses. Portfolio Risk Elements – Home Equity Lending The majority of our home equity lines of credit (“HELOCs”) have an initial draw period of 9 1/2 years followed by a20-year repayment phase. During the initial draw period, interest-only payments are required, after which the disbursed balance is fully amortized over a20-year repayment term. HELOCs carry variable rates indexed to the Prime Rate with a lifetime interest rate ceiling and floor, and are secured by first or second liens on the borrower’s primary residence. The rate used to qualify borrowers is the Prime Rate plus 3.00%, even though the initial rate may be substantially lower. The maximum LTV ratio is 80% on a single-family property, including a condominium, and 70% on atwo-family property. Lower LTV ratios are required on larger line amounts. The minimum FICO credit score is 680. The borrower has the ability to convert the entire balance or a portion of the balance to a fixed-rate term loan during the draw period. There is a limit of three term loans that must be fully amortized over a term not to exceed the original HELOC maturity date. A smaller portion of our HELOC portfolio has an initial draw period of 10 years with a variable-rate interest-only payment, after which there is a5-year amortization period. An additional small portion of our HELOC portfolio has a5-year draw period which, at our discretion, may be renewed for an additional5-year interest-only draw period. 83 The following table sets forth, as of September 30,
Approximately Delinquency statistics for the HELOC portfolio as of September 30,
For the The majority of home equity loans fully amortize over terms ranging from 5 to 20 years. Home equity loans are limited to first or second liens on a borrower’s primary residence. The maximum LTV ratio is 80% on a single-family property, including a condominium, and 70% on atwo-family property. Lower LTV ratios are required on larger line amounts. We are not able, at this time, to develop statistics for the entire home equity portfolio (both HELOCs and home equity loans) with respect to first liens serviced by third parties that have priority over our junior liens, as lien position data has not historically been captured on our loan servicing systems. As of September 30, As of September 30, When the first lien is held by a third-party, we can, in some cases, obtain an indication that a first lien is in default through information reported to credit bureaus. However, because more than one mortgage may be reported in a borrower’s credit report and there may not be a corresponding property address associated with reported mortgages, we are often unable to associate a specific first lien with our junior lien. As of September 30, 2019. 84 We believe there are several factors that serve to mitigate the potential risk associated with the limitations on available first lien data. Most importantly, our underwriting guidelines for home equity loans, which have been, and continue to be, consistently applied, generally require the following: (i) properties located within our geographic footprint; (ii) lower LTV ratios; and (iii) higher credit scores. Notwithstanding the maximum LTV ratios and minimum FICO scores discussed previously, actual LTV ratios at origination were less than 60% on average and current FICO scores of our borrowers are greater than 750 on average. In addition, as of September 30, Each month, all home equity and second mortgage loans greater than 180 days past due (regardless of our lien position) are analyzed in order to determine the amount by which the balance outstanding (including any amount subject to a first lien) exceeds the underlying collateral value. To the extent a shortfall exists, acharge-off is recognized. Thischarge-off activity is reflected in our established allowance for loan losses for home equity and second mortgage loans as part of the component attributable to historical portfolio loss experience, which considers losses incurred over the most recent12-month period. While the limitations on available first lien data could impact the accuracy of our loan loss estimates, we believe that our methodology results in an allowance for loan losses that appropriately estimates the inherent probable losses within the portfolio, including those loans originated prior to January 2011 for which certain lien position data is not available. As of September 30, Portfolio Risk Elements – Commercial Real Estate Lending In general, construction loans originated by People’s United are used to finance improvements to commercial, industrial or residential property. Repayment is typically derived from the sale of the property as a whole, the sale of smaller individual units or by atake-out from a permanent mortgage. The term of the construction period generally does not exceed two years. Loan commitments are based on established construction budgets that represent an estimate of total costs to complete the proposed project, including both hard (direct) costs (such as building materials and labor) and soft (indirect) costs (such as legal and architectural fees). In addition, project costs may include an appropriate level of interest reserve to carry the project through to completion. If established, such interest reserves are determined based on: (i) a percentage of the committed loan amount; (ii) the loan term; and (iii) the applicable interest rate. Regardless of whether a loan contains an interest reserve, the total project cost statement serves as the basis for underwriting and determining which items will be funded by the loan and which items will be funded through borrower equity. Construction loans are funded, at the request of the borrower, not more than once per month, based on the extent of work completed, and are monitored, throughout the life of the project, by an independent professional construction engineer and the Company’s commercial real estate lending department. Interest is advanced to the borrower upon request, based on the progress of the project toward completion. The amount of interest advanced is added to the total outstanding principal under the loan commitment. Should the project not progress as scheduled, the adequacy of the interest reserve necessary to carry the project through to completion is subject to close monitoring by management. Should the interest reserve be deemed to be inadequate, the borrower is required to fund the deficiency. Similarly, once a loan is fully funded, the borrower is required to fund all interest payments. People’s United’s construction loan portfolio totaled Historically, certain economic conditions have resulted in an increase in the number of extension requests for commercial real estate and construction loans, some of which may have included related repayment guarantees. Modifications of commercial real estate loans involving maturity extensions are evaluated according to the Company’s normal underwriting standards and are classified as TDRs if the borrower is experiencing financial difficulty and is afforded a concession by People’s United similar to those discussed previously. People’s United had 2019. 85 An extension may be granted to allow for the completion of the project, marketing or sales of completed units, or to provide for permanent financing, and is based on are-underwriting of the loan and management’s assessment of the borrower’s ability to perform according to the agreed-upon terms. Typically, at the time of an extension, borrowers are performing in accordance with contractual loan terms. Extension terms generally do not exceed 12 to 18 months and usually require that the borrower provide additional economic support in the form of partial repayment, additional collateral or guarantees. In cases where the fair value of the collateral or the financial resources of the borrower are deemed insufficient to repay the loan, reliance may be placed on the support of a guarantee, if applicable. However, such guarantees are never considered the sole source of repayment. People’s United evaluates the financial condition of guarantors based on the most current financial information available. Most often, such information takes the form of (i) personal financial statements of net worth, cash flow statements and tax returns (for individual guarantors) and (ii) financial and operating statements, tax returns and financial projections (for legal entity guarantors). The Company’s evaluation is primarily focused on various key financial metrics, including net worth, leverage ratios and liquidity. It is the Company’s policy to update such information annually, or more frequently as warranted, over the life of the loan. While People’s United does not specifically track the frequency with which it has pursued guarantor performance under a guarantee, the Company’s underwriting process, both at origination and upon extension, as applicable, includes an assessment of the guarantor’s reputation, creditworthiness and willingness to perform. Historically, when the Company has found it necessary to seek performance under a guarantee, it has been able to effectively mitigate its losses. In considering the impairment status of such loans, an evaluation is made of the collateral and future cash flow of the borrower as well as the anticipated support of any repayment guarantor. In the event that the guarantor is unwilling or unable to perform, a legal remedy is pursued. When performance under the loan terms is deemed to be uncertain, including performance of the guarantor, all or a portion of the loan may becharged-off, typically based on the fair value of the collateral securing the loan. Allowance and Provision for Loan Losses Originated Portfolio The allowance for loan losses is established through provisions for loan losses charged to income. Losses on loans, including impaired loans, are charged to the allowance for loan losses when all or a portion of a loan is deemed to be uncollectible. Recoveries of loans previously charged off are credited to the allowance for loan losses when realized. People’s United maintains the allowance for loan losses at a level that is deemed to be appropriate to absorb probable losses inherent in the respective loan portfolios, based on a quarterly evaluation of a variety of factors. These factors include, but are not limited to: (i) People’s United’s historical loan loss experience and recent trends in that experience; (ii) risk ratings assigned by lending personnel to commercial real estate loans, commercial and industrial loans, and equipment financing loans, and the results of ongoing reviews of those ratings by People’s United’s independent loan review function; (iii) an evaluation of delinquent andnon-performing loans and related collateral values; (iv) the probability of loss in view of geographic and industry concentrations and other portfolio risk characteristics; (v) the present financial condition of borrowers; and (vi) current economic conditions. The Company’s allowance for loan losses consists of three elements: (i) an allowance for larger-balance,non-homogeneous loans that are evaluated on an individual(loan-by-loan) basis; (ii) an allowance forsmaller-balance, homogeneous loans that are evaluated on a collective basis; and (iii) a specific allowance for loans deemed to be impaired, including loans classified as TDRs. 86 Larger-balance,Non-homogeneous Loans.The Company establishes a loan loss allowance for itslarger-balance,non-homogeneous loans using a methodology that incorporates (i) the probability of default for a given loan risk rating and (ii) historical loss-given-default data, both derived using an appropriate look back period. In accordance with the Company’s loan risk rating system, each loan, with the exception of those included in large groups of smaller-balance homogeneous loans, is assigned a risk rating (using a nine-grade scale) by the originating loan officer, credit management, internal loan review or loan committee. Loans rated “One” represent those loans least likely to default while loans rated “Nine” represent a loss. The probability of loans defaulting for each risk rating, referred to as default factors, are estimated based on the historical pattern of loans migrating from one risk rating to another and to default status over time as well as the length of time that it takes losses to emerge. Estimated loan default factors, which are updated annually (or more frequently, if necessary), are multiplied by loan balances within each risk-rating category and again multiplied by a historical loss-given-default estimate for each loan type to determine an appropriate level of allowance by loan type. The historical loss-given-default estimates are also updated annually (or more frequently, if necessary) based on actualcharge-off experience. This approach is applied to the commercial and industrial, commercial real estate and equipment financing components of the loan portfolio. In establishing the allowance for loan losses for larger-balance,non-homogeneous loans, the Company also gives consideration to certain qualitative factors, including the macroeconomic environment and any potential imprecision inherent in its loan loss model that may result from having limited historical loan loss data which, in turn, may result in inaccurate probability of default and loss-given-default estimates. In this manner, historical portfolio experience, as described above, is not adjusted and the allowance for loan losses always includes a component attributable to qualitative factors, the degree of which may change from period to period as such qualitative factors indicate improving or worsening trends. The Company evaluates the qualitative factors on a quarterly basis in order to conclude that they continue to be appropriate. There were no significant changes in our approach to determining the qualitative component of the related allowance for loan losses during the nine months ended September 30, 2019. Smaller-balance, Homogeneous Loans.Pools of smaller-balance, homogeneous loans with similar risk and loss characteristics are also assessed for probable losses. These loan pools include residential mortgage, home equity and other consumer loans that are not assigned individual loan risk ratings. Rather, the assessment of these portfolios, and the establishment of the related allowance for loan losses, is based upon a consideration of (i) historical loss experience over an appropriate look-back period and (ii) certain qualitative factors. The qualitative component of the allowance for loan losses for smaller-balance, Portfolio-specific risk characteristics considered include: (i) collateral values/LTV ratios (above and below 70%); (ii) borrower credit scores under the FICO scoring system (above and below a score of 680); and (iii) other relevant portfolio risk elements such as income verification at the time of underwriting (stated income vs.non-stated income) and the property’s intended use (owner-occupied,non-owner occupied, second home, etc.), the combination of which results in a loan being classified as either “High”, “Moderate” or “Low” risk. These risk classifications are reviewed quarterly to ensure that changes within the portfolio, as well as economic indicators and industry developments, have been appropriately considered in establishing the related allowance for loan losses. In establishing the allowance for loan losses for smaller-balance, homogeneous loans, the amount reflecting the Company’s consideration of qualitative factors is added to the amount attributable to historical portfolio loss experience. In this manner, historicalcharge-off data (whether periods or amounts) is not adjusted and the allowance for loan losses always includes a component attributable to qualitative factors, the degree of which may change from period to period as such qualitative factors indicate improving or worsening trends. The Company evaluates the qualitative factors on a quarterly basis in order to conclude that they continue to be appropriate. There were no significant changes in our approach to determining the qualitative component of the related allowance for loan losses during the nine months ended September 30, 87 Individually Impaired Loans.The allowance for loan losses also includes specific allowances for individually impaired loans. Generally, the Company’s impaired loans consist of (i) classified commercial loans in excess of $1 million that have been placed onnon-accrual status and (ii) loans classified as TDRs. Individually impaired loans are measured based upon observable market prices; the present value of expected future cash flows discounted at the loan’s original effective interest rate; or, in the case of collateral dependent loans, fair value of the collateral (based on appraisals and other market information) less cost to sell. If the recorded investment in a loan exceeds the amount measured as described in the preceding sentence, a specific allowance for loan losses would be established as a component of the overall allowance for loan losses or, in the case of a collateral dependent loan, acharge-off would be recorded for the difference between the loan’s recorded investment and management’s estimate of the fair value of the collateral (less cost to sell). It would be rare for the Company to identify a loan that meets the criteria stated above and requires a specific allowance or acharge-off and not deem it impaired solely as a result of the existence of a guarantee. People’s United performs an analysis of its impaired loans, including collateral dependent impaired loans, on a quarterly basis. Individually impaired collateral dependent loans are measured based upon the appraised value of the underlying collateral and other market information. Generally, the Company’s policy is to obtain updated appraisals for commercial collateral dependent loans when the loan is downgraded to a risk rating of “substandard” or “doubtful”, and the most recent appraisal is more than 12 months old or a determination has been made that the property has experienced a significant decline in value. Appraisals are prepared by independent, licensed third-party appraisers and are subject to review by the Company’s internal commercial appraisal department or external appraisers contracted by the commercial appraisal department. The conclusions of the external appraisal review are reviewed by the Company’s Chief Commercial Appraiser prior to acceptance. The Company’s policy with respect to impaired loans secured by residential real estate is to receive updated estimates of property values upon the loan being classified asnon-performing (typically upon becoming 90 days past due). In determining the allowance for loan losses, People’s United gives appropriate consideration to the age of appraisals through its regular evaluation of other relevant qualitative and quantitative information. Specifically, between scheduled appraisals, property values are monitored within the commercial portfolio by reference to current originations of collateral dependent loans and the related appraisals obtained during underwriting as well as by reference to recent trends in commercial property sales as published by leading industry sources. Property values are monitored within the residential mortgage and home equity portfolios by reference to available market indicators, including real estate price indices within the Company’s primary lending areas. In most situations where a guarantee exists, the guarantee arrangement is not a specific factor in the assessment of the related allowance for loan losses. However, the assessment of a guarantor’s credit strength is reflected in the Company’s internal loan risk ratings which, in turn, are an important factor in its allowance for loan loss methodology for loans within the commercial and industrial and commercial real estate portfolios. People’s United did not change its methodologies with respect to determining the allowance for loan losses during the Acquired Portfolio Loans acquired in a business combination are initially recorded at fair value with no carryover of an acquired entity’s previously established allowance for loan losses. Fair value of the loans is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected, as adjusted for an estimate of future credit losses and prepayments, and then applying a market-based discount rate to those cash flows. Acquired loans are evaluated upon acquisition and classified as either purchased performing or PCI, which represents those acquired loans with specific evidence of deterioration in credit quality since origination and for which it is probable that, as of the acquisition date, all contractually required principal and interest payments will not be collected. PCI loans are generally accounted for on a pool basis, with pools formed based on the loans’ common risk characteristics, such as loan collateral type and accrual status. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. 88 For purchased performing loans, the required allowance for loan losses is determined in a manner similar to that for originated loans with a provision for loan losses only recorded when the required allowance for loan losses exceeds any remaining purchase discount at the loan level. For PCI loans, the difference between contractually required principal and interest payments at the acquisition date and the undiscounted cash flows expected to be collected at the acquisition date is referred to as the “nonaccretable difference”, which includes an estimate of future credit losses expected to be incurred over the life of the loans in each pool. A decrease in the expected cash flows in subsequent periods requires the establishment of an allowance for loan losses at that time. At September 30, Under the accounting model for PCI loans, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the “accretable yield”, is accreted into interest income over the life of the loans in each pool using the level yield method. Accordingly, PCI loans are not subject to classification asnon-accrual in the same manner as other loans. Rather, PCI loans are considered to be accruing loans because their interest income relates to the accretable yield recognized at the pool level and not to contractual interest payments at the loan level. The difference between contractually required principal and interest payments and the cash flows expected to be collected, referred to as the “nonaccretable difference”, includes estimates of both the impact of prepayments and future credit losses expected to be incurred over the life of the loans in each pool. As such, charge-offs on PCI loans are first applied to the nonaccretable difference and then to any allowance for loan losses recognized subsequent to acquisition. A decrease in expected cash flows in subsequent periods may indicate that the loan pool is impaired, which would require the establishment of an allowance for loan losses by a charge to the provision for loan losses. Selected asset quality metrics presented below distinguish between the ‘originated’ portfolio and the ‘acquired’ portfolio. All loans acquired in connection with acquisitions comprise the acquired loan portfolio; all other loans of the Company comprise the originated portfolio, including originations subsequent to the respective acquisition dates. Provision and Allowance for Loan Losses
89 The provision for loan losses on originated loans totaled $6.9 million for the three months ended September 30, 2019, reflecting $4.7 million in net loan charge-offs and an increase in the originated allowance for loan losses in response to portfolio-specific risk factors and loan mix. The provision for loan losses on acquired loans for the three months ended September 30, 2019 reflects net loan charge-offs of $1.1 million. The provision for loan losses on originated loans totaled $6.5 million Management believes that the level of the allowance for loan losses at September 30, Loan Charge-Offs The Company’scharge-off policies, which comply with standards established by banking regulators, are consistently applied from period to period. Charge-offs are recorded on a monthly basis. Partiallycharged-off loans continue to be evaluated on a monthly basis and additional charge-offs or loan loss provisions may be recorded on the remaining loan balance based on the same criteria. For unsecured consumer loans, charge-offs are generally recorded when the loan is deemed to be uncollectible or 120 days past due, whichever occurs first. For consumer loans secured by real estate, including residential mortgage loans, charge-offs are generally recorded when the loan is deemed to be uncollectible or 180 days past due, whichever occurs first, unless it can be clearly demonstrated that repayment will occur regardless of the delinquency status. Factors that demonstrate an ability to repay may include: (i) a loan that is secured by adequate collateral and is in the process of collection; (ii) a loan supported by a valid guarantee or insurance; or (iii) a loan supported by a valid claim against a solvent estate. For commercial loans, acharge-off is recorded when the Company determines that it will not collect all amounts contractually due based on the fair value of the collateral less cost to sell, or the present value of expected future cash flows. The decision whether tocharge-off all or a portion of a loan rather than to record a specific or general loss allowance is based on an assessment of all available information that aids in determining the loan’s net realizable value. Typically, this involves consideration of both (i) the fair value of any collateral securing the loan, including whether the estimate of fair value has been derived from an appraisal or other market information and (ii) other factors affecting the likelihood of repayment, including the existence of guarantees and insurance. If the amount by which the Company’s recorded investment in the loan exceeds its net realizable value is deemed to be a confirmed loss, acharge-off is recorded. Otherwise, a specific or general reserve is established, as applicable. The comparatively low level of net loan charge-offs in recent years, in terms of absolute dollars and as a percentage of average total loans, may not be sustainable in the future. Net Loan Charge-Offs (Recoveries)
90 Net Loan Charge-Offs (Recoveries) as a Percentage of Average Total Loans (Annualized)
Non-Performing Assets A loan is generally considered All previously accrued but unpaid interest onnon-accrual loans is reversed from interest income in the period in which the accrual of interest is discontinued. Interest payments received onnon-accrual loans (including impaired loans) are generally applied as a reduction of principal if future collections are doubtful, although such interest payments may be recognized as income. A loan remains onnon-accrual status until the factors that indicated doubtful collectability no longer exist or until a loan is determined to be uncollectible and is charged off against the allowance for loan losses. There were no loans past due 90 days or more and still accruing interest at September 30, 91 Non-Performing Assets
1.Reported net of government guarantees totaling: $1.4 million at September 30, 2019; $1.6 million at June 30, 2019; $1.4 million at March 31, 2019; $1.9 million at December, 31, 2018 and $2.5 million at September 30, 2018. These government guarantees relate, almost entirely, to guarantees provided by the Small Business Administration as well as selected other Federal agencies and represent the carrying value of the loans that are covered by such guarantees, the extent of which (i.e. full or partial) varies by loan. At September 30, 2019, the principal loan classes to which these government guarantees relate are commercial and industrial loans (95%) and commercial real estate loans (5%). The table above excludes acquired loans that are (i) accounted for as PCI loans and/or (ii) covered by a FDIC loss-share agreement (“LSA”), which totaled $10.1 million at September 30, 2019; $25.8 million at June 30, 2019; $34.3 million at March 31, 2019; $44.1 million at December 31, 2018 and $23.7 million at September 30, Totalnon-performing assets 2019. 92 All loans and REO acquired in the Butler Bank acquisition are subject to an FDIC LSA (expiring in 2020), which provides for coverage by the FDIC, up to certain limits, on all such ‘covered assets’. The FDIC is obligated to reimburse the Company for 80% of any future losses on covered assets up to $34 million. The Company will reimburse the FDIC for 80% of recoveries with respect to losses for which the FDIC paid the Company 80% reimbursement under the loss-sharing coverage. In addition to thenon-performing loans discussed above, People’s United has also identified At September 30, The levels ofnon-performing assets and potential problem loans are expected to fluctuate in response to changing economic and market conditions, and the relative sizes of the respective loan portfolios, along with management’s degree of success in resolving problem assets. While management takes a proactive approach with respect to the identification and resolution of problem loans, the level ofnon-performing assets may increase in the future.
Liquidity is defined as the ability to generate sufficient cash flows to meet all present and future funding requirements at reasonable costs. Liquidity management addresses both People’s United’s and the Bank’s ability to fund new loans and investments as opportunities arise, to meet customer deposit withdrawals and to repay borrowings and subordinated notes as they mature. People’s United’s, as well as the Bank’s, liquidity positions are monitored daily by management. The Asset and Liability Management Committee (“ALCO”) of the Bank has been authorized by the Board of Directors of People’s United to set guidelines to ensure maintenance of prudent levels of liquidity for People’s United as well as for the Bank. ALCO reports to the Treasury and Finance Committee of the Board of Directors of People’s United. Asset liquidity is provided by: cash; short-term investments and securities purchased under agreements to resell; proceeds from maturities, principal repayments and sales of securities; and proceeds from scheduled principal collections, prepayments and sales of loans. In addition, certain securities may be used to collateralize borrowings under repurchase agreements. The Consolidated Statements of Cash Flows present data on cash provided by and used in People’s United’s operating, investing and financing activities. At September 30, Liability liquidity is measured by both People’s United’s and the Bank’s ability to obtain deposits and borrowings at cost-effective rates that are diversified with respect to markets and maturities. Deposits, which are considered the most stable source of liability liquidity, totaled 93 The Bank’s current available sources of borrowings include: federal funds purchased, advances from the Federal Home Loan Bank (the “FHLB”) of Boston and the Federal Reserve Bank of New York (the At September 30, The sources of liquidity discussed above are deemed by management to be sufficient to fund outstanding loan commitments and to meet both People’s United’s and the Bank’s other obligations.
People’s United’s total stockholders’ equity was In October
In June 2019, the Company’s Board of Directors authorized the repurchase of up to 20.0 million shares of People’s United’s common stock. Such shares may be repurchased, either directly or through agents, in the open market at prices and terms satisfactory to management. To date, no shares have been repurchased. 94
On January 1, 2015, both People’s United and the Bank became subject to new capital rules (the “Basel III capital rules”) issued by U.S. banking agencies. In order to avoid limitations on distributions, including dividend payments, and certain discretionary bonus payments, a financial institution must hold a capital conservation buffer above its minimum risk-based capital requirements. For In July 2019, U.S. banking agencies For regulatory capital purposes, subordinated note issuances qualify, up to certain limits, as Tier 2 capital for both People’s United’s and the Bank’s Total risk-based capital. Beginning in 2019, and for each of the next four years, the eligible amount of the Bank’s $400 million subordinated notes due 2014 included in Tier 2 capital will be reduced each year by 20%, or $80 million, in accordance with regulatory capital rules. The following is a summary of People’s United’s and the Bank’s regulatory capital amounts and ratios under the Basel III capital rules. The minimum capital required amounts as of September 30, As discussed in Note 15 to the Consolidated Financial Statements, People's United adopted, effective January 1, 2019, new accounting guidance relating to leases. Upon adoption, the Company recorded (i) operating lease liabilities totaling $268.8 million and (ii) corresponding ROU assets totaling $248.5 million. This transition adjustment served to increase risk-weighted assets, resulting in an approximate 5-10 basis point decrease in the risk-based capital ratios of both the Company and the Bank at that time. As also discussed in Note 15, the Company's adoption of a new accounting standard related to financial instruments, effective January 1, 2020, could result in a 10-15 basis points decrease in the capital ratios at both the Bank and People's United. At September 30,
95
1.Tier 1 Leverage Capital ratio represents CET 1 Capital plus Additional Tier 1 Capital instruments (together, “Tier 1 Capital”) divided by Average Total Assets (less goodwill, other acquisition-related intangibles and other deductions from CET 1 Capital). 2.CET 1 Risk-Based Capital ratio represents equity capital, as defined, less: (i) after-tax net unrealized gains (losses) on certain securities classified as available-for-sale; (ii) after-tax net unrealized gains (losses) on securities transferred to held-to-maturity; (iii) goodwill and other acquisition-related intangible assets; and (iv) the amount recorded in 3.Tier 1 Risk-Based Capital ratio represents Tier 1 Capital divided by Total Risk-Weighted Assets. 4.Total Risk-Based Capital ratio represents Tier 1 Capital plus subordinated notes and debentures, up to certain
Market risk represents the risk of loss to earnings, capital and the economic values of certain assets and liabilities resulting from changes in interest rates, equity prices and foreign currency exchange rates. The only significant market risk exposure for People’s United at this time is IRR, which is a result of the Company’s core business activities of making loans and accepting deposits. Interest Rate Risk The effective management of IRR is essential to achieving the Company’s financial objectives. Responsibility for overseeing management of IRR resides with ALCO. The goal of ALCO is to generate a stable net interest margin over entire interest rate cycles regardless of changes in either short- or long-term interest rates. Generating earnings by taking excessive IRR is prohibited by the IRR limits established by the Company’s Board of Directors. ALCO manages IRR by using two primary risk measurement techniques: simulation of net interest income and simulation of economic value of equity. These two measurements are complementary and provide both short-term and long-term risk profiles of the Company. 96 Net Interest Income at Risk Simulation is used to measure the sensitivity of net interest income to changes in market rates over a period of time, such as 12 or 24 months. This simulation captures underlying product behaviors, such as asset and liability The Company uses two sets of standard scenarios to measure net interest income at risk. Parallel shock scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. Yield curve twist scenarios assume the shape of the curve flattens or steepens instantaneously centered on the 18-month point of the curve, thereby segmenting the yield curve into a “short-end” and a “long-end”. The following tables set forth the estimated percent change in the Company’s net interest income at risk overone-year simulation periods beginning September 30,
The net interest income at risk simulation results indicate that at both September 30, The Company’s 97 Economic Value of Equity at Risk Simulation is conducted in tandem with net interest income simulations, to ascertain a longer term view of the Company’s IRR position by capturing longer-term Base case economic value of equity at risk is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates. The current spot interest rate curve is shocked up and down to generate new interest rate curves for parallel rate shock scenarios. These new curves are then used to The following table sets forth the estimated percent change in the Company’s economic value of equity at risk, assuming various instantaneous parallel shocks in interest rates. Given the current spot interest rate
long rates in this scenario.
The Company’s economic value of equity at risk profile indicates that at both September 30, 2019 and December 31, 2018, the Company’s economic value of equity is liability sensitive in a rising rate environment. The People’s United’s IRR position at September 30, Management has established procedures to be followed in the event of an anticipated or actual breach in policy limits. As of September 30, People’s United uses derivative financial instruments, including interest rate swaps, as components of its market risk management (principally to manage IRR). Certain other derivatives are entered into in connection with transactions with commercial customers. Derivatives are not used for speculative purposes. At September 30, 98 The Bank has entered into pay floating/receive fixed interest rate swaps to reduce its IRR exposure to the variability in interest cash flows on certain floating-rate commercial loans. The Bank has agreed with the swap counterparties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated based on notional amounts totaling $210 million. The floating-rate interest payments made under the swaps are calculated using the same floating rate received on the commercial loans. The swaps effectively convert the floating-rateone-month LIBOR interest payments received on the commercial loans to a fixed rate and consequently reduce the Bank’s exposure to variability in short-term interest rates. These swaps are accounted for as cash flow hedges. The Bank has entered into a pay floating/receive fixed interest rate swap to hedge the change in fair value due to changes in interest rates of the Bank’s $400 million subordinated notes. The Bank has agreed with the swap counterparty to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated based on a notional amount of $375 million. The fixed-rate interest payments received on the swap will essentially offset the fixed-rate interest payments made on these notes, notwithstanding the notional difference between these notes and the swap. The floating-rate interest amounts paid under the swap are calculated based on three-month LIBOR plus 126.5 basis points. The swap effectively converts the fixed-rate subordinated notes to a floating-rate liability. This swap is accounted for as a fair value hedge. People’s United has written guidelines that have been approved by its Board of Directors and ALCO governing the use of derivative financial instruments, including approved counterparties and credit limits. Credit risk associated with these instruments is controlled and monitored through policies and procedures governing collateral management and credit approval. By using derivatives, People’s United is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset in the Consolidated Statements of Condition. In accordance with the Company’s balance sheet offsetting policy (see Note Certain of People’s United’s derivative contracts contain provisions establishing collateral requirements (subject to minimum collateral posting thresholds) based on the Company’s external credit rating. If the Company’s senior unsecured debt rating were to fall below the level generally recognized as investment grade, the counterparties to such derivative contracts could require additional collateral on those derivative transactions in a net liability position (after considering the effect of master netting arrangements and posted collateral). 2019 was $1.4 million, for which People’s United had posted collateral of $0.8 million in the normal course of business. If the Company’s senior unsecured debt rating had fallen below investment grade as of that date, $0.6 million in additional collateral would have been required. Foreign Currency Risk Foreign exchange contracts are commitments to buy or sell foreign currency on a future date at a contractual price. People’s United uses these instruments on a limited basis to (i) eliminate its exposure to fluctuations in currency exchange rates on certain of its commercial loans that are denominated in foreign currencies and (ii) provide foreign exchange contracts on behalf of commercial customers within credit exposure limits. Gains and losses on foreign exchange contracts substantially offset the translation gains and losses on the related loans. 99 Derivative Financial Instruments The following table summarizes certain information concerning derivative financial instruments utilized by People’s United in its management of IRR and foreign currency risk:
People’s United enters into interest rate swaps and caps with certain of its commercial customers. In order to minimize its risk, these customer interest rate swaps (pay floating/receive fixed) and caps have been offset with essentially matching interest rate swaps (pay fixed/receive floating) and caps with People’s United’s institutional counterparties. Hedge accounting has not been applied for these derivatives. Accordingly, changes in the fair value of all such interest rate swaps and caps are recognized in current earnings. The following table summarizes certain information concerning these interest rate swaps and caps:
See Notes Item 3 – Quantitative and Qualitative Disclosures About Market Risk Item 4 – Controls and Procedures People’s United’s management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of People’s United’s disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that People’s United’s disclosure controls and procedures are effective, as of September 30, 100 During the quarter ended September 30, Item 1 – Legal Proceedings In the normal course of business, People’s United is subject to various legal proceedings. Management has discussed with legal counsel the nature of these legal proceedings and, based on the advice of counsel and the information currently available, believes that the eventual outcome of these legal proceedings will not have a material adverse effect on its financial condition, results of operations or liquidity. Item 1A – Risk Factors Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds (c) The following table provides information with respect to purchases made by People’s United of its common stock during the three months ended September 30, 2019: Issuer Purchases of Equity Securities
1.All shares listed were tendered by employees of People’s United in satisfaction of their related minimum tax withholding obligations upon the vesting of restricted stock awards granted in prior periods and/or in payment of the exercise price and satisfaction of their related minimum tax withholding obligations upon the exercise of stock options granted in prior periods. The average price paid per share is equal to the average of the high and low trading price of People’s United’s common stock on The NASDAQ Global Select Market on the vesting or exercise date or, if no trades took place on that date, the most recent day for which trading data was available. There is no limit on the number of shares that may be tendered by employees of People’s United in the future for these purposes. Shares acquired in payment of the option exercise price or in satisfaction of minimum tax withholding obligations are not eligible for reissuance in connection with any subsequent grants made pursuant to equity compensation plans maintained by People’s United. All shares acquired in this manner are retired by People’s United, resuming the status of authorized but unissued shares of People’s United’s common stock. Item 3 – Defaults Upon Senior Securities Item 4 – Mine Safety Disclosures None. 101 Item 5 – Other Information Item 6 – Exhibits The following Exhibits are filed herewith:
102 INDEX TO EXHIBITS
103 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, People’s United Financial, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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