People’s United Bank had first quarter net income of $130.4 million, or $0.30 per common share. Before People’s United closed on two acquisitions last year, net income in the first quarter of 2019 was $114.6 million. Fourth quarter net income was $137.5 million.
The Bridgeport, Connecticut-based bank’s provision for credit losses totaled $33.5 million under the new current expected credit loss accounting standard, with $22.9 million reflecting the application of CECL and the impact of COVID-19, the bank said in its first quarter earnings statement.
During a call to discuss first quarter earnings on April 23, David Rosato, People’s United’s senior executive vice president and chief financial officer, said the provision for credit losses could go higher.
“Since we finalized estimates, the economic environment has continued to deteriorate and a high level of uncertainty remains, as to the duration and ultimate impact of the pandemic,” Rosato said. “As such, we might experience another elevated provision in the second quarter.”
Since the start of the coronavirus crisis, People’s United has granted forbearances to 12 percent of the commercial loan portfolio, said CEO Jack Barnes during the call. He added that the pace of forbearances had started to slow down.
Of the sectors most affected by the pandemic, People’s United’s loan portfolio includes $4.7 billion in retail. According to its first quarter earnings presentation, the bank has “no material exposure to enclosed retail malls.” Barnes said more than half the retail exposure was anchored by big box home improvement stores, gas stations, convenience stores, grocery stores and pharmacies, including Stop & Shop and CVS.
The bank also has $1 billion of its portfolio in hospitality, with most of the hotels located in main cities within the bank’s footprint, including New York City; Boston; Portsmouth, New Hampshire; and Burlington, Vermont. Barnes said 70 percent of the exposure represented long-term People’s United customers.
The bank’s restaurant exposure is $540 million. Almost half of that includes quick-service restaurants that have been less affected by the current crisis, Barnes said.
The bank has granted forbearance on more than 7,600 loans as of April 21, including 1,200 commercial loans, 4,244 equipment loans and 2,130 retail loans. The bank also deferred fee increases scheduled for April 1.
“People’s United is committed to supporting those experiencing hardship due to the pandemic,” Barnes said in a statement. “We are in this together, and difficult times often bring forth the very best in all of us. We have witnessed this each day through the dedication of our employees, including our branch and call center personnel continuing to serve customers despite unprecedented conditions, and our IT group who successfully enabled the majority of our workforce to do their jobs remotely.”
People’s United acquired Belmont Savings Bank on April 1 2019 and Hartford-based United Bank on Nov. 1. The bank completed its system conversion with United earlier this month.
