Effective November 1, 2019, People’s United completed its acquisition of United Financial Bancorp, Inc. (“United Financial”) based in Hartford, Connecticut. The fair value of the consideration transferred in the United Financial acquisition totaled $720.6 million and consisted of 44.4 million shares of People’s United common stock. At the acquisition date, United Financial operated 58 branch locations concentrated in central Connecticut and western Massachusetts.

The assets acquired and liabilities assumed in this transaction were recorded by People’s United at their estimated fair values as of the effective date. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill and allocated to the Commercial Banking and Retail Banking segments. Merger-related expenses related to the United Financial acquisition recorded during the year ended December 31, 2019 totaled $22.2 million, including: (i) fees for investment advisory, legal, accounting and valuation services; (ii) costs associated with contract terminations and branch closings; and (iii) compensatory charges.


(in millions)
Assets:
Cash and cash equivalents	$	594.9
Securities	381.3
Loans	5,535.5
Goodwill	204.3
Core deposit intangible	41.5
Premises and equipment	61.8
BOLI	196.5
Lease ROU assets	56.3
Mortgage servicing rights	10.6
REO	1.2
Other assets	136.2
Total assets	$	7,220.1

Liabilities:
Deposits	$	5,687.2
Borrowings	622.4
Lease liabilities	61.4
Other liabilities	128.5
Total liabilities	$	6,499.5
Total purchase price	$	720.6

Net deferred tax assets totaling $16.7 million were established in connection with recording the related purchase accounting adjustments (other than goodwill). Fair value adjustments to assets acquired (other than loans, see Note 5) and liabilities assumed are generally amortized on a straight-line basis over periods consistent with the average life, useful life  and/or contractual term of the related assets and liabilities.

Effective April 1, 2019, People’s United completed its acquisition of BSB Bancorp, Inc. (“BSB Bancorp”) based in Belmont, Massachusetts. The fair value of the consideration transferred in the BSB Bancorp acquisition totaled $324.5 million and consisted of 19.7 million shares of People’s United common stock. At the acquisition date, BSB Bancorp operated  six branches in the greater Boston area.

The assets acquired and liabilities assumed in this transaction were recorded by People’s United at their estimated fair values as of the effective date. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill and allocated to the Commercial Banking and Retail Banking segments. Merger-related expenses related to the BSB Bancorp acquisition recorded during the years ended December 31, 2019 and 2018 totaled $8.1 million and $0.5 million, respectively, including: (i) fees for investment advisory, legal, accounting and valuation services; (ii) costs associated with contract terminations and branch closings; and (iii) compensatory charges.


(in millions)
Assets:
Cash and cash equivalents	$	108.7
Securities	175.8
Loans	2,642.9
Goodwill	144.9
Core deposit intangible	39.5
Premises and equipment	8.3
BOLI	36.8
Other assets	29.8
Total assets	$	3,186.7

Liabilities:
Deposits	$	2,118.7
Borrowings	696.6
Other liabilities	46.9
Total liabilities	$	2,862.2
Total purchase price	$	324.5

Net deferred tax assets totaling $3.8 million were established in connection with recording the related purchase accounting adjustments (other than goodwill). Fair value adjustments to assets acquired (other than loans, see Note 5) and liabilities assumed are generally amortized on a straight-line basis over periods consistent with the average life, useful life and/or contractual term of the related assets and liabilities.

The preceding summaries include adjustments to record the acquired assets and assumed liabilities at their respective fair values based on management’s best estimate using the information available at the time of the respective acquisitions. While there may be changes in the respective acquisition-date fair values of certain balance sheet amounts and other items, management does not expect that such changes, if any, will be material.

The fair values of securities acquired were based on quoted market prices. If a quoted market price for a certain security was not available, then a quoted price for a similar security in active markets was used to estimate fair value.

Loans acquired in connection with these acquisitions were recorded at fair value with no carryover of either United Financial's or BSB Bancorp's previously established allowance for loan losses. Fair value of the loans was determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected as adjusted for an estimate of future credit losses and prepayments and then applying a market-based discount rate to those cash flows. The acquired loans were evaluated upon the acquisition date and subsequently classified as either purchased performing or PCI (see Note 5).

In the aggregate, United Financial loans totaling $136.5 million were deemed PCI (none for BSB Bancorp) and were recorded at a discount from the corresponding outstanding principal balance of $193.1 million. The remaining acquired loans were deemed purchased performing and had a fair value of $8.04 billion and an outstanding principal balance of $8.10 billion, resulting in a discount that will be accreted over the remaining lives of the loans. Included in the Consolidated Statements of Income for the year ended December 31, 2019 is approximately $125 million of interest income attributable to these acquisitions since the respective acquisition dates.

The core deposit intangible represents the value of the relationships with the respective deposit customers. The fair values were estimated based on a cost savings methodology that gave appropriate consideration to expected customer attrition rates, net maintenance costs of the deposit base, the alternative cost of funds, the interest cost associated with the respective customer deposits and discount rates. The core deposit intangibles will be amortized using an accelerated amortization method over a  six-year period for United Financial and a 10-year period for BSB Bancorp, reflective of the manner in which the related benefits attributable to the deposits will be recognized.

The fair values of acquired savings and transaction deposit accounts were assumed to approximate the respective carrying amounts as these accounts have no stated maturity and are payable on demand. Time deposits were valued based on the present value of the contractual cash flows over the remaining period to maturity using a market rate.

The fair values of FHLB advances and other borrowings represent contractual repayments discounted using interest rates currently available on borrowings with similar characteristics and remaining maturities.

The following table presents selected unaudited pro forma financial information of the Company, reflecting the acquisitions of United Financial and BSB Bancorp, assuming the acquisitions were completed as of the beginning of the respective periods:


Years ended December 31 (in millions, except per common share data)	2019		2018
Selected Financial Results:
Net interest income	$	1,582.5	$	1,488.6
Provision for loan losses	28.3		30.0
Non-interest income	454.5		408.1
Non-interest expense	1,277.5		1,186.4
Net income	583.5		552.4
Net income available to common shareholders	569.4		538.3
EPS:
Basic	$	1.31	$	1.30
Diluted	1.30		1.29

The selected unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the financial results of the combined companies had the acquisitions actually been completed at the beginning of the periods presented, nor does it indicate future results for any other interim or full-year period. Merger-related expenses attributable to the acquisitions that were incurred by People’s United, United Financial and BSB Bancorp during the years ended December 31, 2019 and 2018 are not reflected in the selected unaudited pro forma financial information. Pro forma basic and diluted EPS were calculated using People’s United’s actual weighted-average common shares outstanding for the periods presented, plus the incremental common shares issued, assuming the acquisitions occurred at the beginning of the periods presented.

Effective January 2, 2019, the Bank completed its acquisition of VAR Technology Finance ("VAR"), a leasing and financing company headquartered in Mesquite, Texas. The fair value of the consideration transferred in the VAR acquisition consisted of $60.0 million in cash. Merger-related expenses totaling $1.9 million relating to this transaction were recorded during the year ended December 31, 2019.

On October 25, 2019, the Bank completed the sale of eight branches located in central Maine, including approximately: (i) $103 million in loans; (ii) $258 million in deposits; and (iii) $227 million of assets under management. The sale resulted in a gain, net of expenses, of $7.6 million, which is included in other non-interest income in the Consolidated Statements of Income.

Effective October 1, 2018, the Company completed its acquisition of First Connecticut Bancorp, Inc. ("First Connecticut") based in Farmington, Connecticut. The fair value of the consideration transferred in the First Connecticut acquisition totaled $486.4 million and consisted of 28.4 million shares of People's United common stock. At the acquisition date, First Connecticut operated 25 branch locations throughout central Connecticut and western Massachusetts. The fair value of assets acquired and liabilities assumed in the First Connecticut acquisition totaled $3.45 billion and $2.96 billion, respectively. Merger-related expenses recorded during the years ended December 31, 2019 and 2018 related to this acquisition totaled $16.8 million and $8.8 million, respectively.

Effective June 27, 2018, the Bank completed its acquisition of Vend Lease Company ("Vend Lease"), a Baltimore-based equipment finance company. The fair value of the consideration transferred in the Vend Lease acquisition consisted of $37.5 million in cash. In connection with this transaction, the Bank acquired a lease and loan portfolio with an acquisition-date estimated fair value of $68.8 million and recorded goodwill of $23.9 million. Merger-related expenses totaling $2.1 million relating to this transaction were recorded during the year ended December 31, 2018.

Effective August 1, 2017, the Bank completed its acquisition of LEAF, a Philadelphia-based commercial equipment finance company. The fair value of the consideration transferred in the LEAF acquisition consisted of $220.0 million in cash. The fair value of assets acquired and liabilities assumed in this acquisition totaled $957.7 million and $737.7 million, respectively. Merger-related expenses recorded during the year ended December 31, 2017 related to this acquisition totaled $3.7 million.

Prior to the acquisition, and in connection with its previous revolving warehouse debt facilities and term note securitization transactions, LEAF established bankruptcy-remote special-purpose entities ("SPEs") that issued term debt to institutional investors. These SPEs were variable interest entities ("VIEs"), of which LEAF was deemed the primary beneficiary, and, therefore, the related financings were treated as secured borrowings with the SPEs consolidated in LEAF's financial statements. Following the Company’s acquisition of LEAF, approximately $460 million of LEAF's borrowings were repaid prior to September 30, 2017, including all but one remaining securitization, which was repaid without penalty in June 2018.

Effective April 1, 2017, People's United completed its acquisition of Suffolk Bancorp ("Suffolk") based in Riverhead, New York. The fair value of the consideration transferred in the Suffolk acquisition totaled $484.8 million and consisted of 26.6 million shares of People’s United common stock. At the acquisition date, Suffolk operated 27 branch locations in the greater Long Island area. The fair value of assets acquired and liabilities assumed in the Suffolk acquisition totaled $2.38 billion and $1.90 billion, respectively. Merger-related expenses recorded during the year ended December 31, 2017 related to this acquisition totaled $26.6 million.