PBCT » Topics » Third Quarter 2008 Compared to Third Quarter 2007

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

2008 Compared to 2007

The net interest margin declined 50 basis points to 3.62% compared to 2007. The lower net interest margin reflects the dramatic actions taken by the Federal Reserve Board and the company’s asset sensitive balance sheet, including its significant excess capital position, a portion of which continues to be invested in low-yielding short-term investments. Net interest income (FTE basis) increased $153.7 million, reflecting a $214.1 million increase in total interest and dividend income, partially offset by a $60.4 million increase in total interest expense.

Average earning assets totaled $17.7 billion in 2008, a $5.9 billion increase from 2007. Average loans increased $5.3 billion and average securities increased $1.0 billion, primarily as a result of the Chittenden acquisition, while average short-term investments and securities resale agreements decreased $0.4 billion. As a result, average loans, average securities and average short-term investments comprised 82%, 6% and 12%, respectively, of average earning assets in 2008 compared to 77%, 1% and 22%, respectively, in 2007. The yield earned on the total loan portfolio was 5.80% and the yield earned on securities and short-term investments was 2.61%, compared to 6.27% and 5.07%, respectively, in 2007. Excluding adjustable-rate residential mortgage loans, which are mostly of the hybrid variety, approximately 42% of the loan portfolio had floating interest rates at December 31, 2008 compared to approximately 31% at the end of 2007.

The total average commercial banking loan portfolio increased $4.6 billion, reflecting increases of $3.0 billion in commercial real estate loans, $1.5 billion in commercial loans and $0.1 billion in equipment financing loans.

Average residential mortgage loans decreased $30 million compared to 2007. Excluding the effect of residential mortgage loans acquired in the Chittenden acquisition, average residential mortgage loans would have decreased $803 million, reflecting People’s United Financial’s decision in the fourth quarter of 2006 to begin selling essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan

 

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balances are expected to continue to decline in the future until People’s United Financial resumes adding such loans to its portfolio to an extent that more than offsets repayments. Average consumer loans increased $790 million, including a $541 million increase in average home equity loans, primarily as a result of the Chittenden acquisition.

Average funding liabilities totaled $14.8 billion in 2008, a $5.8 billion increase compared to 2007. Average deposits increased $5.5 billion primarily due to the deposits acquired in the Chittenden acquisition. Average non-interest-bearing deposits increased $1.0 billion and average interest-bearing deposits increased $4.5 billion. Average deposits comprised 98% of average funding liabilities in 2008 compared to 99% in the year-ago period. During the second quarter of 2008, $234 million of trust money market deposits were placed with an outside investment manager, thereby removing certain average earning assets and average funding liabilities that were generating only marginal net interest income while at the same time adding fee income.

The 55 basis point decrease to 1.90% from 2.45% in the rate paid on average funding liabilities in 2008 compared to 2007 primarily reflects the decrease in market interest rates and the shift in deposit mix. The rates paid on average deposits decreased 58 basis points in 2008, reflecting decreases of 98 basis points in time deposits and 22 basis points in savings and money market deposits. Average savings and money market deposits and average time deposits comprised 43% and 35%, respectively, of average deposits in 2008 compared to 36% and 41%, respectively, in 2007.

The increases in average borrowings and average subordinated notes in 2008 are a result of the Chittenden acquisition.

2008 Compared to 2007

The net interest margin declined 50 basis points to 3.62% compared to 2007. The lower net interest margin reflects the dramatic actions
taken by the Federal Reserve Board and the company’s asset sensitive balance sheet, including its significant excess capital position, a portion of which continues to be invested in low-yielding short-term investments. Net interest income (FTE
basis) increased $153.7 million, reflecting a $214.1 million increase in total interest and dividend income, partially offset by a $60.4 million increase in total interest expense.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Average earning assets totaled $17.7 billion in 2008, a $5.9 billion increase from 2007. Average loans increased $5.3 billion and average securities
increased $1.0 billion, primarily as a result of the Chittenden acquisition, while average short-term investments and securities resale agreements decreased $0.4 billion. As a result, average loans, average securities and average short-term
investments comprised 82%, 6% and 12%, respectively, of average earning assets in 2008 compared to 77%, 1% and 22%, respectively, in 2007. The yield earned on the total loan portfolio was 5.80% and the yield earned on securities and short-term
investments was 2.61%, compared to 6.27% and 5.07%, respectively, in 2007. Excluding adjustable-rate residential mortgage loans, which are mostly of the hybrid variety, approximately 42% of the loan portfolio had floating interest rates at
December 31, 2008 compared to approximately 31% at the end of 2007.

The total average commercial banking loan portfolio increased
$4.6 billion, reflecting increases of $3.0 billion in commercial real estate loans, $1.5 billion in commercial loans and $0.1 billion in equipment financing loans.

FACE="Times New Roman" SIZE="2">Average residential mortgage loans decreased $30 million compared to 2007. Excluding the effect of residential mortgage loans acquired in the Chittenden acquisition, average residential mortgage loans would have
decreased $803 million, reflecting People’s United Financial’s decision in the fourth quarter of 2006 to begin selling essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan

 


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balances are expected to continue to decline in the future until People’s United Financial resumes adding such loans to its portfolio to an extent that
more than offsets repayments. Average consumer loans increased $790 million, including a $541 million increase in average home equity loans, primarily as a result of the Chittenden acquisition.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Average funding liabilities totaled $14.8 billion in 2008, a $5.8 billion increase compared to 2007. Average deposits increased $5.5 billion primarily
due to the deposits acquired in the Chittenden acquisition. Average non-interest-bearing deposits increased $1.0 billion and average interest-bearing deposits increased $4.5 billion. Average deposits comprised 98% of average funding liabilities in
2008 compared to 99% in the year-ago period. During the second quarter of 2008, $234 million of trust money market deposits were placed with an outside investment manager, thereby removing certain average earning assets and average funding
liabilities that were generating only marginal net interest income while at the same time adding fee income.

The 55 basis point decrease
to 1.90% from 2.45% in the rate paid on average funding liabilities in 2008 compared to 2007 primarily reflects the decrease in market interest rates and the shift in deposit mix. The rates paid on average deposits decreased 58 basis points in 2008,
reflecting decreases of 98 basis points in time deposits and 22 basis points in savings and money market deposits. Average savings and money market deposits and average time deposits comprised 43% and 35%, respectively, of average deposits in 2008
compared to 36% and 41%, respectively, in 2007.

The increases in average borrowings and average subordinated notes in 2008 are a result of
the Chittenden acquisition.

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

Third Quarter 2008 Compared to Third Quarter 2007

The net interest margin declined 57 basis points to 3.71% compared to the third quarter of 2007. The lower net interest margin reflects the dramatic actions taken by the Federal Reserve Board and the temporary investment of the company’s significant excess capital in low-yielding short-term investments. Net interest income (FTE basis) increased $26.5 million, reflecting a $34.0 million increase in total interest and dividend income, partially offset by a $7.5 million increase in total interest expense.

Average earning assets totaled $17.3 billion in the third quarter of 2008, a $4.8 billion increase from the third quarter of 2007, while the asset mix continued to shift. Average loans increased $5.4 billion and average securities increased $0.6 billion, primarily as a result of the Chittenden acquisition. Average short-term investments and securities resale agreements decreased $1.2 billion, reflecting the use of approximately $1.0 billion of short-term investments to fund the Chittenden acquisition on January 1, 2008. As a result, average loans, average securities and average short-term investments comprised 82%, 4% and 14%, respectively, of average earning assets in the third quarter of 2008 compared to 71%, 1% and 28%, respectively, in the 2007 period. In the current quarter, the yield earned on the total loan portfolio was 5.75% and the yield earned on securities and short-term investments was 2.35%, compared to 6.35% and 5.29%, respectively, in the year-ago quarter. Excluding adjustable-rate residential mortgage loans, which are mostly of the hybrid variety, approximately 39% of the loan portfolio has floating interest rates compared to approximately 30% in the year-ago quarter.

 

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The total average commercial banking loan portfolio increased $4.6 billion, reflecting increases of $3.1 billion in commercial real estate loans, $1.4 billion in commercial loans and $0.1 billion in equipment financing loans. At September 30, 2008, the shared national credits loan portfolio totaled $679 million compared to $738 million at December 31, 2007, reflecting People’s United Financial’s decision earlier this year to unwind this portfolio in an orderly fashion over the next two to three years.

Average residential mortgage loans decreased $74 million compared to the year-ago quarter. Excluding the effect of residential mortgage loans acquired in the Chittenden acquisition, average residential mortgage loans would have decreased $836 million, reflecting People’s United Financial’s decision in the fourth quarter of 2006 to begin selling essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan balances are expected to continue to decline in the future until People’s United Financial resumes adding such loans to its portfolio to an extent that more than offsets repayments. Average consumer loans increased $825 million, including a $573 million increase in average home equity loans, primarily as a result of the Chittenden acquisition.

Average funding liabilities totaled $14.5 billion in the third quarter of 2008, a $5.7 billion increase compared to the year-ago quarter. Average deposits increased $5.4 billion primarily due to the deposits acquired in the Chittenden acquisition. Average non-interest-bearing deposits increased $1.0 billion and average interest-bearing deposits increased $4.4 billion. Average deposits comprised 98% of average funding liabilities in the third quarter of 2008 compared to 99% in the year-ago period.

The 76 basis point decrease to 1.73% from 2.49% in the rate paid on average funding liabilities primarily reflects the decrease in market interest rates and the shift in deposit mix. The rates paid on average deposits decreased 81 basis points from the third quarter of 2007, reflecting decreases of 135 basis points in time deposits and 38 basis points in savings and money market deposits. Average savings and money market deposits and average time deposits comprised 43% and 34%, respectively, of average total deposits in the third quarter of 2008 compared to 35% and 41%, respectively, in the 2007 period.

 

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

Second Quarter 2008 Compared to Second Quarter 2007

The net interest margin declined 67 basis points to 3.56% compared to the second quarter of 2007. The lower net interest margin reflects the dramatic actions taken by the Federal Reserve Board and the temporary investment of the company’s significant excess capital in low-yielding short-term investments. Net interest income (FTE basis) increased $25.9 million, reflecting a $40.9 million increase in total interest and dividend income, partially offset by a $15.0 million increase in total interest expense.

Average earning assets totaled $17.8 billion in the second quarter of 2008, a $5.3 billion increase from the second quarter of 2007, while the asset mix continued to shift. Average short-term investments decreased $804 million, reflecting the use of approximately $1.0 billion of short-term investments to fund the Chittenden acquisition on January 1, 2008. Average loans increased $5.3 billion and average securities increased $0.8 billion, primarily as a result of the Chittenden acquisition. As a result, average loans, average securities and average short-term investments comprised 81%, 5% and 14%, respectively, of average earning assets in the second quarter of 2008 compared to 73%, 1% and 26%, respectively, in the 2007 period. In the current quarter, the yield earned on the total loan portfolio was 5.76% and the yield earned on securities and short-term investments was 2.48%, compared to 6.27% and 5.30%, respectively, in the year-ago quarter. Excluding adjustable-rate residential mortgage loans, which are mostly of the hybrid variety, approximately 38% of the loan portfolio has floating interest rates compared to 29% in the year-ago quarter.

 

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The total average commercial banking loan portfolio increased $4.6 billion reflecting increases of $3.0 billion in commercial real estate loans, $1.5 billion in commercial loans and $0.1 billion in equipment financing loans. Included in average commercial loans and average commercial real estate loans were increases of $100 million, or 38%, and $65 million, or 17%, in the respective national credits portfolios (primarily due to draw downs on existing lines). At June 30, 2008, the shared national credits loan portfolio totaled $708 million, compared to $738 million at December 31, 2007.

Average residential mortgage loans decreased $34 million and average consumer loans increased $739 million (including a $482 million increase in average home equity loans) primarily as a result of the Chittenden acquisition. Excluding the effect of residential loans acquired in the Chittenden acquisition, average residential loans would have decreased $822 million, reflecting People’s United Financial’s decision in the fourth quarter of 2006 to sell essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan balances are expected to continue to decline (excluding the effect of the loans acquired in the Chittenden acquisition) in the future until People’s United Financial resumes adding such loans to its portfolio to an extent that more than offsets repayments.

Average funding liabilities totaled $14.9 billion in the second quarter of 2008, a $5.7 billion increase compared to the year-ago quarter. Average deposits increased $5.4 billion primarily due to the deposits acquired in the Chittenden acquisition. Average deposits comprised 98% of average funding liabilities in the second quarter of 2008 compared to 99% in the year-ago period. Average non-interest-bearing deposits increased $1.0 billion and average interest-bearing deposits increased $4.4 billion.

The 51 basis point decrease to 1.89% from 2.40% in the rate paid on average funding liabilities primarily reflects the decrease in market interest rates and the shift in deposit mix. The rates paid on average deposits decreased 54 basis points from the second quarter of 2007, reflecting decreases of 98 basis points in time deposits and 23 basis points in savings and money market deposits. Average time deposits comprised 36% of average total deposits in the second quarter of 2008 compared to 39% in the 2007 period.

 

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

First Quarter 2008 Compared to Fourth Quarter 2007

The net interest margin decreased 33 basis points and net interest income increased $42.7 million compared to the fourth quarter of 2007. Total interest and dividend income increased $75.6 million and total interest expense increased $32.9 million.

Average earning assets increased $5.7 billion, reflecting increases of $5.7 billion in average loans and $1.0 billion in average securities, partially offset by a $1.0 billion decrease in average short-term investments. The increases primarily reflect the loans and securities acquired in the Chittenden acquisition, while the decrease in average short-term investments reflects the $1.0 billion required to fund the Chittenden acquisition.

Average funding liabilities increased $6.5 billion reflecting increases of $6.2 billion in average deposits, $0.2 billion in average borrowings and $0.1 billion in average subordinated notes. The increases primarily reflect the funding liabilities acquired in the Chittenden acquisition.

The table on the following page presents average balances, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended March 31, 2008, December 31, 2007 and March 31, 2007. The average balances are principally daily averages and, for loans, include both performing and non-performing balances. Interest income on loans includes the effect of deferred loan fees and costs accounted for as yield adjustments, but does not include interest on loans for which People’s United Financial has ceased to accrue interest. The impact of People’s United Financial’s use of derivative instruments in managing interest rate risk is also reflected in the tables, classified according to the instrument hedged and the risk management objective.

 

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