PBCT » Topics » Income Taxes

This excerpt taken from the PBCT 10-Q filed May 11, 2009.

Income Taxes

 

 

People’s United Financial’s effective income tax rate was 32.5% in the first quarter of 2009, compared to 28.4% in the first quarter of 2008 and 33.0% in the fourth quarter of 2008. The lower effective income tax rate in the first quarter of 2008 primarily reflects a non-taxable BOLI death benefit. People’s United Financial’s effective income tax rate for the remainder of 2009 is expected to be approximately 32.5%.

 

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These excerpts taken from the PBCT 10-K filed Mar 2, 2009.

Income Taxes

 

Income tax expense from continuing operations totaled $68.0 million, $75.5 million and $57.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. Income tax benefits of $1.1 million and $2.4 million are included in income tax expense from continuing operations for the years ended December 31, 2008 and 2006, respectively. These benefits relate to (i) a non-taxable BOLI death benefit recognized in 2008 and (ii) the completion of federal income tax audits in 2008 and 2005.

Excluding these benefits from the respective years, People’s United Financial’s effective income tax rate from continuing operations would have been 33.3%, 33.6% and 33.5% for the years ended December 31, 2008, 2007 and 2006, respectively. People’s United Financial’s effective income tax rate is expected to increase slightly in 2009 due to a higher level of non-deductible expenses and an increase in state income tax liabilities associated with the company’s expanded geographic franchise following the Chittenden acquisition.

Income tax expense for all three years reflects the state tax benefit resulting from the formation of People’s Mortgage Investment Company, a wholly owned subsidiary of People’s United Bank. The formation of this subsidiary was a result of Connecticut tax legislation, which became effective on January 1, 1999, that allows for the transfer of mortgage loans to a passive investment subsidiary. The related earnings of the subsidiary, and any dividends it pays to the parent, are not subject to Connecticut income tax.

In connection with the acquisition of Chittenden, People’s United Financial acquired $25 million of limited partnership investments to develop and operate affordable housing units for lower income tenants throughout New England. The cost of these investments is amortized on a straight-line basis over the period during which the related federal income tax credits are realized (generally ten years). These credits totaled $4.0 million for the year ended December 31, 2008. See Note 12 to the Consolidated Financial Statements.

 

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Income Taxes

STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000"> 

Income tax expense from continuing operations
totaled $68.0 million, $75.5 million and $57.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. Income tax benefits of $1.1 million and $2.4 million are included in income tax expense from continuing operations for
the years ended December 31, 2008 and 2006, respectively. These benefits relate to (i) a non-taxable BOLI death benefit recognized in 2008 and (ii) the completion of federal income tax audits in 2008 and 2005.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Excluding these benefits from the respective years, People’s United Financial’s effective income tax rate from continuing operations would have
been 33.3%, 33.6% and 33.5% for the years ended December 31, 2008, 2007 and 2006, respectively. People’s United Financial’s effective income tax rate is expected to increase slightly in 2009 due to a higher level of non-deductible
expenses and an increase in state income tax liabilities associated with the company’s expanded geographic franchise following the Chittenden acquisition.

FACE="Times New Roman" SIZE="2">Income tax expense for all three years reflects the state tax benefit resulting from the formation of People’s Mortgage Investment Company, a wholly owned subsidiary of People’s United Bank. The formation of
this subsidiary was a result of Connecticut tax legislation, which became effective on January 1, 1999, that allows for the transfer of mortgage loans to a passive investment subsidiary. The related earnings of the subsidiary, and any dividends
it pays to the parent, are not subject to Connecticut income tax.

In connection with the acquisition of Chittenden, People’s United
Financial acquired $25 million of limited partnership investments to develop and operate affordable housing units for lower income tenants throughout New England. The cost of these investments is amortized on a straight-line basis over the period
during which the related federal income tax credits are realized (generally ten years). These credits totaled $4.0 million for the year ended December 31, 2008. See Note 12 to the Consolidated Financial Statements.

STYLE="margin-top:0px;margin-bottom:0px"> 


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Income Taxes

FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB No. 109” (“FIN 48”), specifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. FIN 48 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.

Deferred taxes are recognized for the estimated future tax effects attributable to “temporary differences” and tax loss carryforwards. Temporary differences are differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax liability is recognized for all temporary differences that will result in future taxable income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions and for all tax loss carryforwards, subject to reduction of the asset by a valuation allowance in certain circumstances. This valuation allowance is recognized if, based on an

 

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People’s United Financial, Inc. and Subsidiaries

Notes to Consolidated Financial Statements—(Continued)

 

analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be realized. The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to future taxable income. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income tax expense in the period that includes the enactment date of the change. Tax benefits attributable to deductions arising from the exercise of non-statutory stock options are credited to additional paid-in capital.

Income Taxes

FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB No. 109”
(“FIN 48”), specifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. FIN 48 prescribes a recognition threshold of
more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Deferred taxes are recognized for the estimated future tax effects attributable to “temporary differences” and tax loss carryforwards.
Temporary differences are differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax liability is recognized for all temporary differences that will result in future taxable
income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions and for all tax loss carryforwards, subject to reduction of the asset by a valuation allowance in certain circumstances. This
valuation allowance is recognized if, based on an

 


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People’s United Financial, Inc. and Subsidiaries

STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 



analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be
realized. The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to future taxable income. The effect on deferred tax
assets and liabilities of a change in tax laws or rates is recognized in income tax expense in the period that includes the enactment date of the change. Tax benefits attributable to deductions arising from the exercise of non-statutory stock
options are credited to additional paid-in capital.

This excerpt taken from the PBCT 10-Q filed Nov 7, 2008.

Income Taxes

 

People’s United Financial’s effective income tax rate was 32.9% in the third quarter of 2008, compared to 33.8% in the third quarter of 2007 and 34.0% in the second quarter of 2008. The lower effective income tax rate in the third quarter of 2008 primarily reflects a deferred tax benefit resulting from the enactment of Massachusetts state income tax legislation that serves to lower People’s United Financial’s overall effective income tax rate in Massachusetts. People’s United Financial’s effective income tax rate for the fourth quarter of 2008 is expected to be approximately 34%.

 

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This excerpt taken from the PBCT 10-Q filed Aug 8, 2008.

Income Taxes

 

People’s United Financial’s effective income tax rate was 34.0% in the second quarter of 2008 compared to 34.5% in the second quarter of 2007 and 28.4% in the first quarter of 2008. The lower effective income tax rate in the first quarter of 2008 primarily reflects a non-taxable BOLI death benefit. People’s United Financial’s effective income tax rate for the remainder of 2008 is expected to be approximately 34%.

 

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This excerpt taken from the PBCT 10-Q filed May 12, 2008.

Income Taxes

People’s United Financial’s effective income tax rate was 28.4% in the first quarter of 2008 compared to 33.8% in the first quarter of 2007 and 33.0% in the fourth quarter of 2007. The lower effective income tax rate in the first quarter of 2008 primarily reflects a non-taxable BOLI death benefit. People’s United Financial’s effective income tax rate for the remainder of 2008 is expected to be approximately 34%.

 

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These excerpts taken from the PBCT 8-K filed Mar 17, 2008.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled.

These excerpts taken from the PBCT 10-K filed Feb 29, 2008.

Income Taxes

In June 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB No. 109,” (“FIN 48”). This statement clarifies the criteria that an individual tax position must satisfy for some or all of the benefits that position to be recognized in a company’s financial statements. FIN 48 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.

 

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People’s United Financial, Inc. and Subsidiaries

Notes to Consolidated Financial Statements—(Continued)

 

Deferred taxes are recognized for the estimated future tax effects attributable to “temporary differences” and tax loss carryforwards. Temporary differences are differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax liability is recognized for all temporary differences that will result in future taxable income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions and for all tax loss carryforwards, subject to reduction of the asset by a valuation allowance in certain circumstances. This valuation allowance is recognized if, based on an analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be realized. The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to future taxable income. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income tax expense in the period that includes the enactment date of the change. Tax benefits attributable to deductions arising from the exercise of non-statutory stock options are credited to additional paid-in capital.

Income Taxes

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">In June 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes, an interpretation of FASB No. 109,” (“FIN 48”). This statement clarifies the criteria that an individual tax position must satisfy for some or all of the benefits that position to be recognized in a company’s
financial statements. FIN 48 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the
financial statements.

 


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People’s United Financial, Inc. and Subsidiaries

STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


Deferred taxes are recognized for the estimated future tax effects attributable to “temporary
differences” and tax loss carryforwards. Temporary differences are differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax liability is recognized for all temporary
differences that will result in future taxable income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions and for all tax loss carryforwards, subject to reduction of the asset by a valuation
allowance in certain circumstances. This valuation allowance is recognized if, based on an analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be realized.
The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to future taxable income. The effect on deferred tax
assets and liabilities of a change in tax laws or rates is recognized in income tax expense in the period that includes the enactment date of the change. Tax benefits attributable to deductions arising from the exercise of non-statutory stock
options are credited to additional paid-in capital.

This excerpt taken from the PBCT 10-K filed Apr 13, 2007.

Income Taxes

Deferred taxes are recognized for the estimated future tax effects attributable to “temporary differences” and tax loss carryforwards. Temporary differences are differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax liability is recognized for all temporary differences

 

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People’s Bank and Subsidiaries

Notes to Consolidated Financial Statements

 

that will result in future taxable income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions and for all tax loss carryforwards, subject to reduction of the asset by a valuation allowance in certain circumstances. This valuation allowance is recognized if, based on an analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be realized. The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to future taxable income. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income tax expense in the period that includes the enactment date of the change. Tax benefits attributable to deductions arising from the exercise of non-statutory stock options are credited to additional paid-in capital.

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