People's United Financial Inc. (NASDAQ:PBCT) Q3 2020 Earnings Conference Call - Final Transcript

Oct 22, 2020 • 05:00 pm ET


People's United Financial Inc. (NASDAQ:PBCT) Q3 2020 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the People's United Financial, Inc. Third Quarter 2020 Earnings Conference Call. My name is Gigi, and I will be your coordinator for today. [Operator Instructions]

I would now like to turn the presentation over to Mr. Andrew Hersom, Senior Vice President of Investor Relations for People's United Financial, Inc. Please proceed, sir.

Andrew S. Hersom

Good afternoon, and thank you for joining us today. On the call to review our third quarter 2020 results are Jack Barnes, Chairman and Chief Executive Officer; David Rosato, Chief Financial Officer; Kirk Walters, Corporate Development and Strategic Planning; Jeff Tengel, President; and Jeff Hoyt, Chief Accounting Officer. Please remember to refer to our forward-looking statement on Slide 1 of this presentation, which is posted on the Investor Relations website

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

John P. Barnes

Thank you, Andrew, and good afternoon. We appreciate everyone joining us today and hope you and your loved ones are remaining safe and healthy. Before discussing the results, I want to take a moment to thank our employees who have successfully adapted to the pandemic-driven environment and its many challenges. This has enabled them to effectively meet customer needs, successfully introduce AlwaysChecking our new free digital identity protection service and further advance strategic initiatives, very proud of the dedication our employees have displayed in the creative ways that they have supported customers and each other during these uncertain times. This is a reflection of the deeply ingrained culture People's United has, which has been built over many years and differentiates the company in the markets we serve.

Let's begin by turning to Slide 2. We are pleased with our third quarter financial and operating performance, which is the result of strong execution across the franchise. Operating earnings of $144.7 million increased 43% linked-quarter and 7% from a year ago. On a per common share basis, operating earnings were $0.34, up $0.10 from the previous quarter and in line with the prior year. These results benefited from solid fee income, well maintained expenses, reduced provision linked-quarter and the lower effective tax rate. Partially offset in these favorable items was net interest margin compression. Our continued thoughtful approach to expense management and realization of projected cost savings from acquisitions drove a 300 basis point improvement year-over-year in the third quarter efficiency ratio to 53.8%.

We are particularly pleased that with our ability to successfully control cost and strengthen operating leverage has led to a significant enhancement in the efficiency ratio in recent years. A full-year efficiency ratio has improved annually since 2013 when we reported a ratio of 62.3%. By 2019, the ratio was down to 55.8% and we expect this improving trend will continue in 2020 as the year-to-date efficiency ratio stands at 53.8%. Importantly, we remain focused on expense management and discipline, we are also steadfast in our commitment to investing strategically in the business. Such investments include further enhancing digital capabilities, delivering innovative products and services, and strengthening leadership and