NOTE 15 – Comprehensive Income
Comprehensive income represents the sum of net income and items of “other comprehensive income or loss,” including (on an after-tax basis): (i) net actuarial gains and losses, prior service credits and costs, and transition assets and obligations related to People’s United Financial’s pension and other postretirement benefit plans; (ii) net unrealized gains or losses on securities available for sale; (iii) net unrealized gains and losses on securities transferred to held to maturity; and (iv) net unrealized gains or losses on derivatives accounted for as cash flow hedges. People’s United Financial’s total comprehensive income for the years ended December 31, 2013, 2012 and 2011 is reported in the Consolidated Statements of Comprehensive Income.
The following is a summary of the changes in the components of accumulated other comprehensive loss (“AOCL”), which are included in People’s United Financial’s stockholders’ equity on an after-tax basis:
(in millions) |
Pension and Other Postretirement Benefits |
Net Unrealized Gains (Losses) on Securities Available for Sale |
Net Unrealized Gains (Losses) on Securities Transferred to Held to Maturity |
Net Unrealized Gains (Losses) on Derivatives Accounted for as Cash Flow Hedges |
Total Accumulated Other Comprehensive Loss |
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Balance at December 31, 2010 |
$ | (101.0 | ) | $ | 1.5 | $ | — | $ | 0.5 | $ | (99.0 | ) | ||||||||
Current period other comprehensive income (loss) |
(37.8 | ) | 41.7 | — | (0.7 | ) | 3.2 | |||||||||||||
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Balance at December 31, 2011 |
(138.8 | ) | 43.2 | — | (0.2 | ) | (95.8 | ) | ||||||||||||
Current period other comprehensive income (loss) |
(9.4 | ) | 9.6 | — | (1.3 | ) | (1.1 | ) | ||||||||||||
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Balance at December 31, 2012 |
(148.2 | ) | 52.8 | — | (1.5 | ) | (96.9 | ) | ||||||||||||
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Other comprehensive income (loss) before reclassifications |
58.3 | (99.3 | ) | (23.3 | ) | 0.5 | (63.8 | ) | ||||||||||||
Amounts reclassified from AOCL (1) |
4.9 | — | — | 0.7 | 5.6 | |||||||||||||||
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Current period other comprehensive income (loss) |
63.2 | (99.3 | ) | (23.3 | ) | 1.2 | (58.2 | ) | ||||||||||||
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Balance at December 31, 2013 |
$ | (85.0 | ) | $ | (46.5 | ) | $ | (23.3 | ) | $ | (0.3 | ) | $ | (155.1 | ) | |||||
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(1) | See table below for details about these reclassifications. |
The following is a summary of the amounts reclassified from AOCL:
Year ended December 31 (in millions) |
Amounts Reclassified from AOCL |
Affected Line Item in the Statement Where Net Income is Presented |
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2013 | ||||||
Details about components of AOCL: |
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Amortization of pension and other postretirement benefits items: |
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Net actuarial loss |
$ | (8.8 | ) | (1) | ||
Prior service credit |
1.1 | (1) | ||||
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(7.7 | ) | Income before income tax expense | ||||
2.8 | Income tax benefit | |||||
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(4.9 | ) | Net income | ||||
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Amortization of unrealized gains and losses on cash flow hedges: |
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Interest rate swaps |
(1.3 | ) | Interest expense - notes and debentures | |||
Interest rate locks |
0.1 | Interest expense - notes and debentures | ||||
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(1.2 | ) | Income before income tax expense | ||||
0.5 | Income tax benefit | |||||
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(0.7 | ) | Net income | ||||
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Total reclassifications for the period |
$ | (5.6 | ) | |||
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(1) | Included in the computation of net periodic pension cost reflected in compensation and benefits expense (see Note 16 for additional details). |
The deferred income taxes applicable to the components of AOCL are as follows:
As of December 31 (in millions) |
2013 | 2012 | 2011 | |||||||||
Net actuarial loss and other amounts related to pension and other postretirement benefit plans |
$ | 50.0 | $ | 86.5 | $ | 80.3 | ||||||
Net unrealized loss (gain) on securities available for sale |
27.7 | (30.4 | ) | (24.9 | ) | |||||||
Net unrealized loss on securities transferred to held to maturity |
13.7 | — | — | |||||||||
Net unrealized loss on derivatives accounted for as cash flow hedges |
0.2 | 0.9 | 0.1 | |||||||||
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Total deferred income taxes |
$ | 91.6 | $ | 57.0 | $ | 55.5 | ||||||
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The following is a summary of the components of People’s United Financial’s total other comprehensive income (loss):
Pre-Tax | After-Tax | |||||||||||
Year ended December 31, 2013 (in millions) |
Amount | Tax Effect | Amount | |||||||||
Net actuarial gain or loss on pension plans and other postretirement benefits: |
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Net actuarial gain arising during the year |
$ | 92.0 | $ | (33.7 | ) | $ | 58.3 | |||||
Reclassification adjustment for net actuarial loss included in net income |
8.8 | (3.2 | ) | 5.6 | ||||||||
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Net actuarial gain |
100.8 | (36.9 | ) | 63.9 | ||||||||
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Prior service credit on pension plans and other postretirement benefits: |
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Reclassification adjustment for prior service credit included in net income |
(1.1 | ) | 0.4 | (0.7 | ) | |||||||
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Net actuarial gain, prior service credit and transition obligation |
99.7 | (36.5 | ) | 63.2 | ||||||||
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Net unrealized gains and losses on securities available for sale: |
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Net unrealized holding losses arising during the year |
(194.4 | ) | 58.1 | (136.3 | ) | |||||||
Unrealized holding losses on securities transferred during the year |
37.0 | — | 37.0 | |||||||||
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Net unrealized losses |
(157.4 | ) | 58.1 | (99.3 | ) | |||||||
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Net unrealized gains and losses on securities transferred to held to maturity: |
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Unrealized holding losses on securities transferred during the year |
(37.0 | ) | 13.7 | (23.3 | ) | |||||||
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Net unrealized losses |
(37.0 | ) | 13.7 | (23.3 | ) | |||||||
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Net unrealized gains and losses on derivatives accounted for as cash flow hedges: |
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Net unrealized gains arising during the year |
0.7 | (0.2 | ) | 0.5 | ||||||||
Reclassification adjustment for net realized losses included in net income |
1.2 | (0.5 | ) | 0.7 | ||||||||
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Net unrealized gains |
1.9 | (0.7 | ) | 1.2 | ||||||||
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Total other comprehensive loss |
$ | (92.8 | ) | $ | 34.6 | $ | (58.2 | ) | ||||
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Pre-Tax | After-Tax | |||||||||||
Year ended December 31, 2012 (in millions) |
Amount | Tax Effect | Amount | |||||||||
Net actuarial gain or loss on pension plans and other postretirement benefits: |
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Net actuarial loss arising during the year |
$ | (22.5 | ) | $ | 8.9 | $ | (13.6 | ) | ||||
Reclassification adjustment for net actuarial loss included in net income |
7.6 | (3.0 | ) | 4.6 | ||||||||
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Net actuarial loss |
(14.9 | ) | 5.9 | (9.0 | ) | |||||||
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Prior service credit on pension plans and other postretirement benefits: |
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Reclassification adjustment for prior service credit included in net income |
(1.0 | ) | 0.4 | (0.6 | ) | |||||||
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Transition obligation on other postretirement benefits: |
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Reclassification adjustment for transition obligation on other postretirement benefits included in net income |
0.3 | (0.1 | ) | 0.2 | ||||||||
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Net actuarial loss, prior service credit and transition obligation |
(15.6 | ) | 6.2 | (9.4 | ) | |||||||
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Net unrealized gains and losses on securities available for sale: |
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Net unrealized holding gains arising during the year |
15.1 | (5.5 | ) | 9.6 | ||||||||
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Net unrealized gains |
15.1 | (5.5 | ) | 9.6 | ||||||||
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Net unrealized gains and losses on derivatives accounted for as cash flow hedges: |
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Net unrealized losses arising during the year |
(3.1 | ) | 1.1 | (2.0 | ) | |||||||
Reclassification adjustment for net realized losses included in net income |
1.0 | (0.3 | ) | 0.7 | ||||||||
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Net unrealized losses |
(2.1 | ) | 0.8 | (1.3 | ) | |||||||
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Total other comprehensive loss |
$ | (2.6 | ) | $ | 1.5 | $ | (1.1 | ) | ||||
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Year ended December 31, 2011 (in millions) |
Amount | Tax Effect | Amount | |||||||||
Net actuarial gain or loss on pension plans and other postretirement benefits: |
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Net actuarial loss arising during the year |
$ | (70.4 | ) | $ | 26.4 | $ | (44.0 | ) | ||||
Reclassification adjustment for net actuarial loss included in net income |
11.8 | (4.4 | ) | 7.4 | ||||||||
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Net actuarial loss |
(58.6 | ) | 22.0 | (36.6 | ) | |||||||
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Prior service credit on pension plans and other postretirement benefits: |
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Reclassification adjustment for prior service credit included in net income |
(2.1 | ) | 0.7 | (1.4 | ) | |||||||
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Transition obligation on other postretirement benefits: |
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Reclassification adjustment for transition obligation on other postretirement benefits included in net income |
0.4 | (0.2 | ) | 0.2 | ||||||||
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Net actuarial loss, prior service credit and transition obligation |
(60.3 | ) | 22.5 | (37.8 | ) | |||||||
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Net unrealized gains and losses on securities available for sale: |
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Net unrealized holding gains arising during the year |
74.6 | (27.3 | ) | 47.3 | ||||||||
Reclassification adjustment for net realized gains included in net income |
(8.8 | ) | 3.2 | (5.6 | ) | |||||||
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Net unrealized gains |
65.8 | (24.1 | ) | 41.7 | ||||||||
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Net unrealized gains and losses on derivatives accounted for as cash flow hedges: |
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Net unrealized losses arising during the year |
(0.4 | ) | 0.1 | (0.3 | ) | |||||||
Reclassification adjustment for net realized gains included in net income |
(0.7 | ) | 0.3 | (0.4 | ) | |||||||
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Net unrealized losses |
(1.1 | ) | 0.4 | (0.7 | ) | |||||||
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Total other comprehensive income |
$ | 4.4 | $ | (1.2 | ) | $ | 3.2 | |||||
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