People's United Financial Inc PBCT
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/18/2013

Operator: Good day, ladies and gentlemen, and welcome to the People's United Financial Inc., Second Quarter Earnings Conference Call. My name is Patrick, and I'll be your coordinator for today. At this time, all participants are in listen-only mode. Following the prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

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

Peter Goulding - Corporate Development and IR: Good afternoon, and thank you for joining us today. Jack Barnes, President and Chief Executive Officer; Kirk Walters, Chief Financial Officer, along with Jeff Hoyt, our Controller, are here with me to review our second quarter results. Please remember to refer to our forward-looking statements on Slide 1 of this presentation, which is posted on our website under the Investor Relations.

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

John P. Barnes - President and CEO: Thank you, Peter, and good afternoon, everyone. I appreciate you joining us today. Before we get into the details of the quarter, I'd like to share my views on our recent – on our current strategic positioning.

As has been the case, since I took over as CEO three years ago, we are, consistent with our conservative approach, building this franchise for the long term. We are forming new relationships and deepening existing relationships across our geographic footprint, while providing our customers with a broad set of solutions to their financial needs. Ultimately, we are shareholders and our choices are designed to maximize shareholder return, not only in the near term but over the medium and long-term. We feel good about the progress we've made and the opportunities for future progress.

Now, with respect to our second quarter results, on Slide 2, operating earnings were $62.4 million and net income was $62.1 million, each equating to $0.20 per share. The net interest margin declined by 5 basis points to 3.33% compared to 3.38% in the first quarter. As I mentioned last quarter, we believe that our net interest margin has now largely stabilized. The margin for the first six months was 3.35%, which was in line with our full year margin guidance that we provided in January of 3.30% to 3.40%. This should allow net interest income to grow at a pace similar to our growth in earning assets.

We are very pleased that the end of period loans grew at 13% annualized rate in the second quarter. This marks our 11th consecutive quarter of loan growth and is a testament to both our relationship managers and our customers. Further, our pipelines remain strong and run-off in the acquired portfolios has slowed as we predicted in January.

The efficiency ratio for the quarter improved to 62.7% from 64.1% in the first quarter, primarily due to revenue growth. Expected growth in net interest income combined with fee income expansion and expense control will produce efficiency ratio progress in the quarters ahead.

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