People's United Financial Inc. (NASDAQ:PBCT) Q1 2018 Earnings Conference Call - Final Transcript

Apr 19, 2018 • 08:00 am ET


People's United Financial Inc. (NASDAQ:PBCT) Q1 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the People's United Financial Incorporated First Quarter 2018 Earnings Conference Call. My name is Crystal, and I will be your co-ordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Andrew Hersom, Senior Vice President of Investor Relations for People's United Financial Incorporated. Please proceed, sir.

Andrew Hersom

Good morning and thank you for joining us today. Here with me to review our first quarter 2018 results are Jack Barnes, President and Chief Executive Officer; David Rosato, Chief Financial Officer; Kirk Walters, Corporate Development and Strategic Planning; Jeff Tengel, Commercial Banking; and Jeff Hoyt, Chief Accounting Officer. Please remember to refer to our forward looking statements on slide one of this presentation, which is posted on our website,, under Investor Relations.

With that, I'll turn the call over to Jack.

John P. Barnes

Thank you, Andrew. Good morning. We appreciate everyone joining us today. Let's begin by turning to the first quarter overview on slide two. Our first quarter performance demonstrates our success in enhancing earnings power of the company while continuing to build the franchise for the long-term. We are pleased to report record quarterly net income of $107.9 million or $0.30 per common share and return on average tangible common equity of 13.8%, an increase of 420 basis points from a year-ago. We continue to execute on revenue-producing initiatives and synergies created by recent acquisitions. As such, we are also pleased, total revenues of $386 million increased 2% from the fourth quarter and 16% from a year-ago, driven by both higher net interest income and fee income.

The net interest margin was 3.05%, a 2 basis-point decline from the fourth quarter, primarily due to the unfavorable impact of tax reform on our municipal bond holdings and tax-preferenced items in our C&I portfolio, as well as 2 fewer calendar days in the first quarter. These declines were partially offset by higher yields on new business and upward repricing of floating-rate loans. On a year-over-year comparison, net interest margin was up 23 basis points, while the first quarter is seasonally higher for expenses, total non-interest expenses increased only 2% from the fourth quarter, reflecting our continued focus on controlling cost. The seasonality in expenses and the unfavorable impact of tax reform on fully taxable equivalent revenues were primarily -- the primary drivers of the increase in the efficiency ratio on a linked-quarter basis.

Average loan balances were $32.1 billion for the quarter, a decline of less than 1% linked-quarter, while the first quarter is typically seasonally slower period for loan growth, production was also unfavorably impacted by customers remaining cautious across our portfolios. Commercial real estate balances were lower primarily due to continued slow market conditions, heightened competition and elevated pay-offs.

In addition, commercial real estate balances reflected greater than