People's United Financial Inc.
) reported fourth-quarter 2013 operating earnings per share of 20
cents, in line with the Zacks Consensus Estimate. However,
earnings compared favorably with 19 cents per share reported in
the prior-year quarter.
Improved credit quality, aided by lower provision for loan losses
was a tailwind for the quarter. Further, increased loans and
deposits reflect organic growth for the company. However, reduced
top line and increased expenses remain concerns.
Operating income was reported at $60.0 million compared with
$63.2 million in the prior-year quarter. Including certain
non-recurring items, net income came in at $59.3 million or 20
cents per share in the quarter under review.
For full-year 2013, operating income was 77 cents per share, up
from 75 cents reported in the prior year and inching past the
Zacks Consensus Estimate by a penny. Including certain one-time
adjustments of 3 cents per share, net income summed to 74 cents.
Performance in Detail
Total revenue, net of expense reported was $305.1 million in the
quarter, down 1.4% year over year, due to reduced net interest as
well as non-interest income. Moreover, results lagged the Zacks
Consensus Estimate of $312.0 million.
For full-year 2013, revenues were $1,221.8 million, down 1.7%
from $1,242.5 million in 2012. Moreover, this compares
unfavorably with the Zacks Consensus Estimate of $1,246.0
Net interest income was $224.9 million in the reported quarter,
down slightly on a year-over-year basis. Moreover, in the
persistent low interest rate environment along with an asset
sensitive balance sheet, operating net interest margin decreased
39 basis points year over year to 3.24%.
Further, non-interest income was $80.2 million, down 4.9% year
over year. The fall was mainly attributed to lower gains on sales
of residential mortgage loans and reduced other non-interest
Non-interest expenses ascended slightly on a year-over-year basis
to $208.7 million. The increase in expenses was primarily
attributable to higher compensation and benefits costs.
Overall, People's United's credit quality significantly improved
during the quarter under review. As of Dec 31, 2013, People's
United's originated non-performing loans totaled $216.6 million,
down 14.3% year over year. Moreover, the ratio of non-performing
loans to total originated loans declined to 0.95% from 1.30% as
of Dec 31, 2012.
Non-performing assets totaled $247.8 million, down 14.4% year
over year. Moreover, non-performing assets (excluding acquired
non-performing loans) were 1.08% of total related assets, down
from 1.48% in the prior-year quarter.
Moreover, net loan charge-offs totaled $10.1 million, almost in
line with the prior-year quarter. Net loan charge-offs, as a
percentage of average loans on an annualized basis, were 0.18%,
down 1 basis point year over year. Provision for loan losses was
recorded at $10.0 million, down 16.7% year over year.
People's United exhibited a strong capital position. Total net
loans stood at $24.2 billion, up 12.6% year over year. Moreover,
total deposits rose 3.7% on a year-over-year basis to $22.6
Operating return on average assets was 0.75%, down from 0.87% in
the prior-year quarter. Moreover, operating return on average
tangible stockholders' equity was 9.8%, increasing from 8.6% in
the prior-year quarter.
As of Dec 31, 2013, People's United's tangible equity ratio fell
to 7.8% from 10.2% in the prior-year quarter. Further, tier 1
common and total risk-based capital ratios were 10.2% and 11.3%
compared with 11.4% and 12.6%, respectively, in the prior
Share Repurchase Update
During 2013, People's United repurchased 33.4 million shares of
common stock at an average price of $13.74 per share. Notably,
during the fourth quarter, the company repurchased 8.9 million
shares at an average price of $14.72 per share and completed the
current share repurchase authorization.
Overall, People's United is trying to overcome the slow economic
recovery through opportunistic acquisitions. Going forward,
growth in loans and deposits is expected to improve the company's
financial results. In addition, the company's capital deployment
activity will definitely boost investors' confidence.
Yet, the recent regulatory issues, increase in expenses and a low
interest rate environment remain major areas of concern. People's
United currently carries a Zacks Rank #4 (Sell).
Among other companies in the same sector,
Mutualfirst Financial Inc.
Northfield Bancorp, Inc. (Staten Island, NY)
Investors Bancorp Inc.
) are expected to report fourth-quarter 2013 earnings on Jan 21,
Jan 23 and Jan 30, respectively.
INVESTORS BANCP (ISBC): Free Stock Analysis
MUTUALFIRST FIN (MFSF): Free Stock Analysis
NORTHFIELD BNCP (NFBK): Free Stock Analysis
PEOPLES UTD FIN (PBCT): Free Stock Analysis
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