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People's United (PBCT) Q1 Earnings in Line, Dividend Up
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People's United Financial Inc.’s first-quarter 2017 operating earnings of 22 cents per share were in line with the Zacks Consensus Estimate. The reported figure was up 4.8% year over year from 21 cents.
Higher revenues and elevated 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 $70.8 million or 22 cents per share compared with $62.9 million or 21 cents per share in the prior-year quarter.
Revenues Escalate, Expenses Flare Up
Net revenue on a fully taxable basis was up 4% year over year to $342.8 million in the quarter, but was almost in line with the Zacks Consensus Estimate.
Net interest income on a fully taxable basis totaled $258.1 million, up 4.3% year over year. However, net interest margin contracted 1 basis point (bps) year over year to 2.82%.
Non-interest income climbed 2.9% year over year to $84.7 million. Higher investment management fees, cash management fees and other non-interest income were the primary reasons for the upsurge.
Non-interest expenses increased 4.0% on a year-over-year basis to $226.1 million. Rise in compensation and benefits, occupancy and equipment expenses and regulatory assessments were partially offset by a fall in professional and outside services, along with lower operating lease expense and other non-interest expenses.
As of Mar 31, 2017, total loans were $29.7 billion, up 4.2% from the prior-year quarter. Further, total deposits increased approximately 4.8% to $30.5 billion from the prior-year quarter end.
Credit Quality Improved
Overall, credit quality metrics at People’s United improved.
As of Mar 31, 2017, non-performing assets were $182.9 million, down 3.4% year over year. Ratio of non-performing loans to total originated loans contracted 6 bps year over year to 0.55%. Also, net loan charge-offs decreased 57.9% year over year to $2.4 million.
Further, provision for loan losses was $4.4 million, down 57.7% year over year.
Stable Capital Position &Profitability Ratios
Capital ratios of People’s United displayed a strong financial position. As of Mar 31, 2017, total risk-based capital ratio climbed to 12.6% from 11.5% in the year-ago quarter. Further, tangible equity ratio was 7.4%, up from 7.3% in the year-ago quarter.
The company’s profitability ratios remained solid. Return on average tangible stockholders’ equity came in at 9.6%, up from 9.4% in the prior-year quarter. Return on average assets of 0.70% was up from 0.65% in the year-ago quarter.
Dividend Update
Concurrent with the earnings release, the Board of Directors of People’s United announced 1.5% hike in the company’s quarterly common stock dividend to 17.25 cents per share. The new dividend will be paid on May 15 to common shareholders of record as of May 1, 2017.
Our Viewpoint
People’s United reported a decent quarter with healthy organic growth. Furthermore, considerable improvement in the credit quality 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
Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 8.9% in first-quarter 2017, riding on higher revenues. The company’s earnings per share of $1.35 for the quarter outpaced the Zacks Consensus Estimate of $1.24. Also, earnings compared favorably with the year-ago figure of $1.10 per share. Notably, results reflect one-time adjustments of 1 cent.
Driven by net interest income, Wells Fargo & Company’s (WFC - Free Report) first-quarter 2017 earnings recorded a positive surprise of about 3.1%. Earnings of $1.00 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, the figure compared favorably with the prior-year quarter’s earnings of 99 cents per share.
M&T Bank Corporation (MTB - Free Report) recorded a positive earnings surprise of 10.8% in first-quarter 2017. The company reported net operating earnings of $2.15 per share which surpassed the Zacks Consensus Estimate of $1.94. Also, the bottom line improved 15% year over year.
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People's United (PBCT) Q1 Earnings in Line, Dividend Up
People's United Financial Inc.’s first-quarter 2017 operating earnings of 22 cents per share were in line with the Zacks Consensus Estimate. The reported figure was up 4.8% year over year from 21 cents.
Higher revenues and elevated 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 $70.8 million or 22 cents per share compared with $62.9 million or 21 cents per share in the prior-year quarter.
Revenues Escalate, Expenses Flare Up
Net revenue on a fully taxable basis was up 4% year over year to $342.8 million in the quarter, but was almost in line with the Zacks Consensus Estimate.
Net interest income on a fully taxable basis totaled $258.1 million, up 4.3% year over year. However, net interest margin contracted 1 basis point (bps) year over year to 2.82%.
Non-interest income climbed 2.9% year over year to $84.7 million. Higher investment management fees, cash management fees and other non-interest income were the primary reasons for the upsurge.
Non-interest expenses increased 4.0% on a year-over-year basis to $226.1 million. Rise in compensation and benefits, occupancy and equipment expenses and regulatory assessments were partially offset by a fall in professional and outside services, along with lower operating lease expense and other non-interest expenses.
As of Mar 31, 2017, total loans were $29.7 billion, up 4.2% from the prior-year quarter. Further, total deposits increased approximately 4.8% to $30.5 billion from the prior-year quarter end.
Credit Quality Improved
Overall, credit quality metrics at People’s United improved.
As of Mar 31, 2017, non-performing assets were $182.9 million, down 3.4% year over year. Ratio of non-performing loans to total originated loans contracted 6 bps year over year to 0.55%. Also, net loan charge-offs decreased 57.9% year over year to $2.4 million.
Further, provision for loan losses was $4.4 million, down 57.7% year over year.
Stable Capital Position &Profitability Ratios
Capital ratios of People’s United displayed a strong financial position. As of Mar 31, 2017, total risk-based capital ratio climbed to 12.6% from 11.5% in the year-ago quarter. Further, tangible equity ratio was 7.4%, up from 7.3% in the year-ago quarter.
The company’s profitability ratios remained solid. Return on average tangible stockholders’ equity came in at 9.6%, up from 9.4% in the prior-year quarter. Return on average assets of 0.70% was up from 0.65% in the year-ago quarter.
Dividend Update
Concurrent with the earnings release, the Board of Directors of People’s United announced 1.5% hike in the company’s quarterly common stock dividend to 17.25 cents per share. The new dividend will be paid on May 15 to common shareholders of record as of May 1, 2017.
Our Viewpoint
People’s United reported a decent quarter with healthy organic growth. Furthermore, considerable improvement in the credit quality 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
Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 8.9% in first-quarter 2017, riding on higher revenues. The company’s earnings per share of $1.35 for the quarter outpaced the Zacks Consensus Estimate of $1.24. Also, earnings compared favorably with the year-ago figure of $1.10 per share. Notably, results reflect one-time adjustments of 1 cent.
Driven by net interest income, Wells Fargo & Company’s (WFC - Free Report) first-quarter 2017 earnings recorded a positive surprise of about 3.1%. Earnings of $1.00 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, the figure compared favorably with the prior-year quarter’s earnings of 99 cents per share.
M&T Bank Corporation (MTB - Free Report) recorded a positive earnings surprise of 10.8% in first-quarter 2017. The company reported net operating earnings of $2.15 per share which surpassed the Zacks Consensus Estimate of $1.94. Also, the bottom line improved 15% year over year.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>