People's United Financial Inc.
) second-quarter 2014 operating earnings per share of 20 cents came
in line with the Zacks Consensus Estimate as well as the prior-year
Results were mainly aided by improving top line and lower provision
for loan losses, slightly tainted by ineffective expense
management. While credit quality showed improvement, capital ratios
Operating income was reported at $59.9 million, down 4% year over
year. Including certain non-recurring items, net income came in at
$72.3 million or 24 cents per share compared to $62.1 million or 20
cents per share in the year-ago quarter.
Performance in Detail
Total revenue, net of expense (fully taxable equivalent) amounted
to $332.9 million, up 6.2% year over year, surpassing the Zacks
Consensus Estimate of $315.0 million.
Fully taxable equivalent total revenue, net of expense, amounted to
$332.9 million, up 6.2% year over year. The number also surpassed
the Zacks Consensus Estimate of $315.0 million.
Further, non-interest income came in at $100.1 million, up 13.5%
year over year. The rise was mainly attributable to a net gain on
the merchant services joint venture.
Adjusted non-interest expenses ascended marginally to $206.7
million. The increase in expenses was primarily attributable to
higher compensation and benefits costs as well as operating lease
expense partially offset by lower other expenses.
Overall, People's United's credit quality continued to show
improvement. As of Jun 30, 2014, the company's originated
non-performing loans totaled $199.1 million, down 19.5% from the
prior-year quarter. Moreover, the ratio of non-performing loans to
total originated loans declined 36 bps to 0.82% year over year.
Non-performing assets summed to $232.7 million, down 17.0% from the
year-ago quarter. Moreover, non-performing assets (excluding
acquired non-performing loans) decreased 37 bps to 0.96% of total
related assets year over year.
Moreover, net loan charge-offs fell 45.5% year over year to $5.5
million. Net loan charge-offs, as a percentage of average loans on
an annualized basis, diminished 9 bps year over year to 0.10%.
Also, provision for loan losses was recorded at $8.0 million, down
20.8% from the prior-year quarter.
People's United's capital position demonstrated mixed results. As
of Jun 30, 2014, total loans stood at $25.5 billion, up 11.3% year
over year. Moreover, total deposits rose 9.6% on a year-over-year
basis to $24.1 billion.
Operating return on average tangible stockholders' equity grew 30
bps from the prior-year quarter to 9.6%. However, operating return
on average assets was 0.72%, down 9 bps year over year.
As of Jun 30, 2014, People's United's tangible equity ratio
descended to 7.9% from the prior-year quarter's ratio of 8.7%.
Further, total risk-based capital ratio declined to 12.5% compared
with 12.8% in the year-ago quarter.
Joint Venture Announcement
People's United declared a joint venture with
), a leading purveyor of electronic integrated payment processing
services in the U.S. This joint venture, represented by People's
United Merchant Services, will present customers with a wide-range
of payment solutions. Through this endeavor, People's United is
looking forward to benefiting from Vantiv's superior technology.
People's United's efforts to triumph over the slow economic
environment were reflected in its improving organic growth. Also,
considerable upturn in loans and deposits along with an effective
decline in nonperforming assets assisted the company in achieving
enhanced financial results.
However, the company's failure to curb its expenses and persisting
low interest rate environment remain major areas of concern.
People's United currently carries a Zacks Rank #3 (Hold).
Earnings of other Sector Participants
Washington Federal Inc.
) reported its fiscal third-quarter 2014 earnings (ended Jun 30) of
37 cents per share beating the Zacks Consensus Estimate by a penny.
It also compared favorably with the prior-year quarter figure of 36
Results were aided by higher revenues, a benefit from provision and
improving credit quality. However, a fall in net interest margin
and increased operating expenses were on the downside.
Among other companies,
First Defiance Financial Corp.
) is scheduled to report earnings on Jul 21.
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PEOPLES UTD FIN (PBCT): Free Stock Analysis
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FIRST DEFIANCE (FDEF): Free Stock Analysis
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