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People's United Gets Fed Approval to Buy Suffolk Bancorp

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People's United Financial, Inc. , a well diversified financial services company, recently received approval from the Federal Reserve to acquire Suffolk Bancorp . The all-stock deal was announced in Jun 2016.

People’s United already obtained approval from Suffolk shareholders as well as the Office of the Comptroller of the Currency. The deal was initially expected to close in late fourth-quarter 2016.

Terms of the Deal

The terms of the deal stated that for each share held in Suffolk Bancorp, the shareholders would receive 2.225 shares of People's United. Based on the closing price of People's United's common stock on Jun 24, 2016, each Suffolk Bancorp share is valued at $33.55.

The company expects the deal to be accretive to its earnings, excluding one-time costs, with an IRR of about 17% and a tangible book value earn-back within five years.

How is People’s United Stock Positioned?

Lately, People’s United has been expanding through acquisitions, which has driven its top-line growth. Also, the company has undertaken steady capital deployment activities. These activities reflect its strong financial position.

We remain optimistic about the company’s prospects owing to its continuous loan growth and improving asset quality. However, mounting expenses and persistent pressure on margins remain near-term concerns.

Also, People’s United shares gained 20.3% in the last six months compared with 23.2% increase of the Zacks categorized Financial-savings and loan industry. 

 

People’s United currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the finance sector include ServisFirst Bancshares, Inc. (SFBS - Free Report) sporting a Zacks Rank #1 (Strong Buy) and First Defiance Financial Corp. carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ServisFirst’s current year earnings estimates have been revised upward by 4.4% over the last 60 days. Also, its shares have gained 104.8% in the last one year.

First Defence has witnessed a nearly 1% upward revision in current year earnings estimates over the last 30 days. The share price for the company has increased 28% in the last one year

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