People’s United Financial Reports First Quarter Net Income of $144.5 Million, or $0.33 per Common Share

View Q1 2021 Financial Schedule

• Announced merger with M&T Bank Corporation, which is expected to close in the fourth quarter of 2021.
• Sustained excellent asset quality as evidenced by net loan charge-offs to average total loans of 12 basis points, and provision for credit losses resulting in a net benefit of $13.6 million.
• Maintained strong deposit inflows as period-end balances increased $1.3 billion or three percent linked-quarter.
• Reached agreement with Stop & Shop on the timing of the exit from all New York in-store branch and ATM locations, which will begin in the third quarter of 2021 with a full exit occurring over four quarters.

BRIDGEPORT, CT., April 22, 2021 - People's United Financial, Inc. (NASDAQ: PBCT) today reported results for the first quarter of 2021. These results along with comparison periods are summarized below:

'Our first quarter results marked a solid start to the year and further highlighted the strengths of the franchise,' said Jack Barnes, Chairman and Chief Executive Officer. 'In February, we announced the merger with M&T, a like-minded partner that has a similar culture, approach to service, complementary offerings, and minimal geographic overlap. This transaction will bring together two high-performing and well-respected institutions to create a leading U.S. super regional bank. The combined company will provide customers greater access to branches, expert bankers, innovative solutions, and enhanced digital capabilities. We are excited about the opportunities ahead and building upon the legacy forged by People's United over 178 years. Importantly, as we work towards the close of the merger, our focus remains steadfast on delivering value to customers, supporting communities, and caring for colleagues.'

'We are pleased with the Company's financial performance in the first quarter,' stated David Rosato, Senior Executive Vice President and Chief Financial Officer. 'Operating income of $156.5 million, increased six percent linked-quarter and generated an operating return of average tangible common equity of 13.8 percent. These results included modestly higher net interest income, continued well-controlled expenses, and a negative provision for credit losses primarily driven by an improved economic outlook. Net interest margin of 2.74 percent was 10 basis points lower than the fourth quarter due to lower yields in the securities portfolio, two fewer calendars days and increased excess liquidity. These headwinds were partially offset by a further reduction in deposits costs for the seventh consecutive quarter, and stable loan yields. The loan-to-deposit ratio concluded the quarter at 80 percent as loans decreased $1.1 billion or three percent from December 31, while deposits grew $1.3 billion or three percent. The decline in period-end loans was largely driven by $586 million in lower retail balances, and a $431 million reduction in mortgage warehouse from a record level at year-end. Conversely, the loan portfolio benefited from a net increase in PPP balances of $288 million and continued solid results in LEAF. Deposit growth reflected federal stimulus payments, PPP funds and strong inflows in our municipal business.'

The Company's Board of Directors voted to increase the common stock dividend to an annual rate of $0.73 per share. Based on the closing stock price on April 21, 2021, the dividend yield on People's United Financial common stock is 4.1 percent. The quarterly dividend of $0.1825 per share is payable May 15, 2021 to shareholders of record on May 3, 2021.

People's United Bank, N.A. is a subsidiary of People's United Financial, Inc., a diversified, community-focused financial services company headquartered in the Northeast with over $64 billion in assets. Founded in 1842, People's United Bank offers commercial and retail banking through a network of more than 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine, as well as wealth management solutions. The company also provides specialized commercial services to customers nationwide.

1Q 2021 Financial Highlights

Summary

• Net income totaled $144.5 million, or $0.33 per common share.
  • Net income available to common shareholders totaled $141.0 million.
  • Operating earnings totaled $156.5 million, or $0.37 per common share (See page 13 of the Financial Schedule).
• Net interest income totaled $385.9 million in 1Q21 compared to $382.8 million in 4Q20.
  • Includes $29.6 million associated with PPP loans in 1Q21 ($24.6 million in net fees and $5.0 million in net interest income).
• Net interest margin decreased ten basis points from 4Q20 to 2.74% reflecting:
  • Lower rates on deposits (increase of five basis points).
  • Higher yields on the loan portfolio (increase of three basis points).
  • Lower yields on the securities portfolio (decrease of 11 basis points).
  • Two less calendar days in 1Q21 (decrease of four basis points).
  • Excess liquidity resulting from deposits at the Federal Reserve Bank (decrease of three basis points).
  • PPP loans had a ten basis point favorable impact on the net interest margin in 1Q21.
• Provision for credit losses on loans totaled $(13.6) million.
  • Allowance for credit losses on loans decreased $26.0 million.
  • Net loan charge-offs totaled $12.4 million.
  • Net loan charge-off ratio of 0.12%.
• Non-interest income totaled $94.6 million in 1Q21 compared to $178.2 million in 4Q20.
  • Operating non-interest income totaled $94.6 million in 1Q21 and $102.3 million in 4Q20 (See page 13 of the Financial Schedule).
  • Investment management fees increased $1.0 million.
  • Customer interest rate swap income decreased $2.1 million.
  • Commercial banking lending fees decreased $1.9 million.
  • Operating lease income decreased $1.6 million.
  • Included in non-interest income in 4Q20 is a $75.9 million net gain on the sale of People's United Insurance Agency, Inc. (See page 13 of the Financial Schedule).
  • At March 31, 2021, assets under discretionary management totaled $9.8 billion.
• Non-interest expense totaled $311.9 million in 1Q21 compared to $646.4 million in 4Q20.
  • Operating non-interest expense totaled $292.3 million in 1Q21 and $288.5 million in 4Q20 (See page 13 of the Financial Schedule).
  • Compensation and benefits expense increased $6.2 million, primarily reflecting seasonally higher payroll and benefit-related costs in 1Q21.
  • Occupancy and equipment expense, excluding $0.3 million of non-operating expenses in 4Q20, decreased $1.5 million.
  • Professional and outside services expense, excluding $9.4 million and $0.8 million of non-operating expenses in 1Q21 and 4Q20, respectively, increased $0.1 million.
  • Regulatory assessment expense increased $1.2 million.
  • Other non-interest expense includes non-operating expenses totaling $10.1 million in 1Q21 and $3.8 million in 4Q20.
  • The efficiency ratio was 56.6% for 1Q21 compared to 55.5% for 4Q20 and 54.0% for 1Q20 (See page 13 of the Financial Schedule).
• The effective income tax rate was 20.7% for 1Q21 compared to 37.0% for the full-year of 2020.
  • The full-year 2020 effective income tax rate reflects the impact of a non-deductible goodwill impairment charge for which no tax benefit was realized. Excluding non-deductible goodwill impairment, the effective income tax rate was 18.4% for the full-year of 2020.
    

• Commercial Banking

• Commercial loans totaled $32.7 billion at March 31, 2021, a $514 million decrease from December 31, 2020.
  • PPP loans increased $288 million ($965 million in initial funding less $677 million in loan forgiveness).
  • The mortgage warehouse portfolio decreased $431 million.
  • The New York multifamily portfolio decreased $39 million.
  • The equipment financing portfolio decreased $3 million.
• Average commercial loans totaled $32.5 billion in 1Q21, a $575 million decrease from 4Q20.
  • PPP loans decreased $5 million.
  • The average mortgage warehouse portfolio decreased $59 million.
  • The average New York multifamily portfolio decreased $53 million.
  • The average equipment financing portfolio increased $20 million.
• Commercial deposits totaled $23.3 billion at March 31, 2021 compared to $22.9 billion at December 31, 2020.
• The ratio of non-accrual commercial loans to total commercial loans was 0.85% at March 31, 2021 compared to 0.74% at December 31, 2020.
• Non-performing commercial assets totaled $286.1 million at March 31, 2021 compared to $255.2 million at December 31, 2020.
• For the commercial loan portfolio, the allowance for credit losses as a percentage of commercial loans was 0.77% at March 31, 2021 compared to 0.91% at December 31, 2020.
• The commercial allowance for credit losses represented 90% of non-accrual commercial loans at March 31, 2021 compared to 123% at December 31, 2020.
  

Retail Banking

• Residential mortgage loans totaled $8.1 billion at March 31, 2021, a $452 million decrease from December 31, 2020.
  • Average residential mortgage loans totaled $8.3 billion in 1Q21, a $493 million decrease from 4Q20.
• Home equity loans totaled $1.9 billion at March 31, 2021, a $123 million decrease from December 31, 2020.
  • Average home equity loans totaled $1.9 billion in 1Q21, a $128 million decrease from 4Q20.
• Retail deposits totaled $30.2 billion at March 31, 2021 compared to $29.2 billion at December 31, 2020.
• The ratio of non-accrual residential mortgage loans to residential mortgage loans was 0.71% at March 31, 2021 compared to 0.73% at December 31, 2020.
• The ratio of non-accrual home equity loans to home equity loans was 1.00% at March 31, 2021 compared to 1.03% at December 31, 2020.
• For the retail loan portfolio, the allowance for credit losses as a percentage of retail loans was 1.48% at March 31, 2021 compared to 1.14% at December 31, 2020.
• The retail allowance for credit losses represented 195% of non-accrual retail loans at March 31, 2021 compared to 146% at December 31, 2020.

Certain statements contained in this release are forward-looking in nature. These include all statements about People's United Financial's plans, objectives, expectations and other statements that are not historical facts, and usually use words such as 'expect,' 'anticipate,' 'believe,' 'should' and similar expressions. Such statements represent management's current beliefs, based upon information available at the time the statements are made, with regard to the matters addressed. All forward-looking statements are subject to risks and uncertainties that could cause People's United Financial's actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors of particular importance to People's United Financial include, but are not limited to: (1) changes in general, international, national or regional economic conditions; (2) changes in interest rates; (3) changes in loan default and charge-off rates; (4) changes in deposit levels; (5) changes in levels of income and expense in non-interest income and expense related activities; (6) changes in accounting and regulatory guidance applicable to banks; (7) price levels and conditions in the public securities markets generally; (8) competition and its effect on pricing, spending, third-party relationships and revenues; (9) the pending merger with M&T Bank Corporation; (10) changes in regulation resulting from or relating to financial reform legislation; and (11) the COVID-19 pandemic and its effect on the economic and business environment in which we operate. People's United Financial does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.