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People's United (PBCT) Q4 Earnings in Line, Revenue Lags
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People's United Financial Inc.’s fourth-quarter 2016 operating earnings of 24 cents per share were in line with the Zacks Consensus Estimate. The reported figure was up 9.1% year over year from 22 cents.
Lower revenues and higher expenses were recorded in the quarter. Growth in loans and deposit balances were the positives. Moreover, credit quality marked a significant improvement.
Net income came in at $74.1 million or 24 cents per share compared with $70.8 million or 23 cents per share in the prior-year quarter.
For 2016, net income came in at $279.2 million or 92 cents per share compared with $260.1 million or 86 cents in 2015. Operating earnings were $282.3 million or 93 cents per share compared with $262.5 million or 87 cents in 2015. Results surpassed the Zacks Consensus Estimate by a penny.
For 2016, net revenue was up 2.3% year over year to $1.31 billion, however lagged the Zacks Consensus Estimate of $1.34 billion.
Net revenue was slightly down year over year to $331 million in the quarter and also lagged the Zacks Consensus Estimate of $343.6 million.
Net interest income on a fully taxable basis totaled $255.2 million, up 4% year over year. However, net interest margin contracted 9 basis points (bps) year over year to 2.78%.
Non-interest income decreased 9.8% year over year to $84.2 million. Lower commercial banking lending fees, operating lease income investment and insurance revenue were the primary reasons for the decline.
Non-interest expenses increased slightly on a year-over-year basis to $217.2 million. Rise in compensation and benefits, occupancy and equipment expenses, regulatory assessments and other non-interest expenses were mostly offset by a fall in professional and outside services, along with lower operating lease expense.
As of Dec 31, 2016, total loans were $29.7 billion, up 4.6% from the prior-year quarter. Moreover, total deposits increased approximately 5.3% to $29.8 billion from the prior-quarter end.
Credit Quality Improved
Overall, credit quality metrics at People’s United improved.
As of Dec 31, 2016, non-performing assets were $167.3 million, down 7.8% year over year. Ratio of non-performing loans to total originated loans declined 7 bps year over year to 0.51%. Also, net loan charge-offs decreased 24.2% year over year to $4.7 million.
Further, provision for loan losses was $7.7 million, down 20.6% year over year.
Stable Capital Position & Profitability Ratios
Capital ratios of People’s United portrayed a strong financial position. As of Dec 31, 2016, total risk-based capital ratio edged down to 12.5% from 11.7% in the year-ago quarter. Further, tangible equity ratio was in line with the year-ago quarter figure of 7.2%.
The company’s profitability ratios were solid. Return on average tangible stockholders’ equity came in at 10.7%, in line with the prior-year quarter figure. Return on average assets of 0.75% was in line with the year-ago quarter.
Our Viewpoint
People’s United reported a decent quarter with healthy organic growth. Moreover, considerable improvement in the loan origination front proved beneficial for the company. Also, we remain encouraged by the company’s steady capital deployment measures.
However, margin pressure and rising non-interest expenses are expected to restrict bottom-line expansion in the upcoming quarters.
People's United Financial Inc. Price, Consensus and EPS Surprise
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share. Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Comerica Inc. (CMA - Free Report) delivered a positive earnings surprise of 4.2% in fourth-quarter 2016. Adjusted earnings per share of 99 cents came ahead of the Zacks Consensus Estimate of 95 cents. The adjusted figure excludes a restructuring charge of 7 cents per share. Also, earnings increased 43.8% year over year.
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People's United (PBCT) Q4 Earnings in Line, Revenue Lags
People's United Financial Inc.’s fourth-quarter 2016 operating earnings of 24 cents per share were in line with the Zacks Consensus Estimate. The reported figure was up 9.1% year over year from 22 cents.
Lower revenues and higher expenses were recorded in the quarter. Growth in loans and deposit balances were the positives. Moreover, credit quality marked a significant improvement.
Net income came in at $74.1 million or 24 cents per share compared with $70.8 million or 23 cents per share in the prior-year quarter.
For 2016, net income came in at $279.2 million or 92 cents per share compared with $260.1 million or 86 cents in 2015. Operating earnings were $282.3 million or 93 cents per share compared with $262.5 million or 87 cents in 2015. Results surpassed the Zacks Consensus Estimate by a penny.
Revenues Disappoints, Expenses Flare Up
For 2016, net revenue was up 2.3% year over year to $1.31 billion, however lagged the Zacks Consensus Estimate of $1.34 billion.
Net revenue was slightly down year over year to $331 million in the quarter and also lagged the Zacks Consensus Estimate of $343.6 million.
Net interest income on a fully taxable basis totaled $255.2 million, up 4% year over year. However, net interest margin contracted 9 basis points (bps) year over year to 2.78%.
Non-interest income decreased 9.8% year over year to $84.2 million. Lower commercial banking lending fees, operating lease income investment and insurance revenue were the primary reasons for the decline.
Non-interest expenses increased slightly on a year-over-year basis to $217.2 million. Rise in compensation and benefits, occupancy and equipment expenses, regulatory assessments and other non-interest expenses were mostly offset by a fall in professional and outside services, along with lower operating lease expense.
As of Dec 31, 2016, total loans were $29.7 billion, up 4.6% from the prior-year quarter. Moreover, total deposits increased approximately 5.3% to $29.8 billion from the prior-quarter end.
Credit Quality Improved
Overall, credit quality metrics at People’s United improved.
As of Dec 31, 2016, non-performing assets were $167.3 million, down 7.8% year over year. Ratio of non-performing loans to total originated loans declined 7 bps year over year to 0.51%. Also, net loan charge-offs decreased 24.2% year over year to $4.7 million.
Further, provision for loan losses was $7.7 million, down 20.6% year over year.
Stable Capital Position & Profitability Ratios
Capital ratios of People’s United portrayed a strong financial position. As of Dec 31, 2016, total risk-based capital ratio edged down to 12.5% from 11.7% in the year-ago quarter. Further, tangible equity ratio was in line with the year-ago quarter figure of 7.2%.
The company’s profitability ratios were solid. Return on average tangible stockholders’ equity came in at 10.7%, in line with the prior-year quarter figure. Return on average assets of 0.75% was in line with the year-ago quarter.
Our Viewpoint
People’s United reported a decent quarter with healthy organic growth. Moreover, considerable improvement in the loan origination front proved beneficial for the company. Also, we remain encouraged by the company’s steady capital deployment measures.
However, margin pressure and rising non-interest expenses are expected to restrict bottom-line expansion in the upcoming quarters.
People's United Financial Inc. Price, Consensus and EPS Surprise
People's United Financial Inc. Price, Consensus and EPS Surprise | People's United Financial Inc. Quote
Currently, People’s United carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share. Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Comerica Inc. (CMA - Free Report) delivered a positive earnings surprise of 4.2% in fourth-quarter 2016. Adjusted earnings per share of 99 cents came ahead of the Zacks Consensus Estimate of 95 cents. The adjusted figure excludes a restructuring charge of 7 cents per share. Also, earnings increased 43.8% year over year.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>