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People's United's (PBCT) Q2 Earnings In Line, Revenues Up
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People's United Financial Inc. reported net earnings of 32 cents per share in second-quarter 2018, in line with the Zacks Consensus Estimate. Moreover, the reported figure climbed 33.3% year over year.
Results benefited from an improvement in net interest income, and decline in expenses and provisions. Loan balances improved during the quarter. However, deteriorating capital position was an undermining factor.
Net income available to common shareholders came in at $106.7 million compared with $65.8 million reported in the prior-year quarter.
Revenues Improve, Expenses Decline
Net revenues, on a fully-taxable basis, were up 6.9% year over year to $402.7 million in the quarter. Also, results surpassed the Zacks Consensus Estimate of $396 million.
Net interest income, on a fully-taxable basis, totaled $307.8 million, up 7.9% year over year. Further, net interest margin expanded 14 basis points (bps) year over year to 3.10%.
Non-interest income was up 3.6% year over year to $94.9 million. A rise in almost all components of income drove the upswing.
Non-interest expenses decreased 3.4% on a year-over-year basis to $248.6 million. The decline was due to fall in all components, other than compensation and benefits, and occupancy and equipment expenses.
Efficiency ratio was 58.4%, in line with the prior-year period.
As of Jun 30, 2018, total loans were $32.5 billion, up 1.3% from the prior-quarter end figure. Total deposits edged down 1.3% from the last quarter to $32.5 billion. However, the decline was a result of seasonal factors experienced by the company’s municipal and retail businesses every year.
Credit Quality Strengthens
As of Jun 30, 2018, non-performing assets were $187 million, down 5.6% year over year. Ratio of non-performing loans to total originated loans shrunk 4 bps from the year-earlier quarter to 0.56%. Also, provision for loan losses came in at $6.5 million, down 8.5% year over year.
Furthermore, net loan charge-offs declined 26.5% year over year to $5 million. Net loan charge-offs, as a percentage of average total loans on an annualized basis, came in at 0.06%, contracting 3 bps year over year.
Capital Position Deteriorates, Profitability Ratios Improve
Capital ratios of People’s United displayed mixed results. As of Jun 30, 2018, total risk-based capital ratio dropped to 12.5% from 12.6% recorded in the comparable quarter last year. Tangible equity ratio was 7.3%, down from 7.5% in the year-ago quarter.
The company’s profitability ratios improved. Return on average tangible stockholder equity was 13.9%, up from 8.7% in the prior-year quarter. Return on average assets of 1% inched up from 0.65% reported in the year-earlier quarter.
Our Viewpoint
Rising loans and expanding net interest margin remain the key positive for People’s United. The company is steadily growing through acquisitions, which is likely to continue in the near future as well. Also, the company’s declining operating expenses will likely drive bottom-line growth. Nevertheless, the company’s high exposure to commercial loans can be risky and dampen its profitability over the long run.
People's United Financial, Inc. Price, Consensus and EPS Surprise
Among other stocks belonging to the same industry, Banner Corporation (BANR - Free Report) and Heritage Financial Corporation (HFWA - Free Report) are set to release their earnings numbers on Jul 25, while OceanFirst Financial Corp. (OCFC - Free Report) is slated to report its figures on Jul 26.
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People's United's (PBCT) Q2 Earnings In Line, Revenues Up
People's United Financial Inc. reported net earnings of 32 cents per share in second-quarter 2018, in line with the Zacks Consensus Estimate. Moreover, the reported figure climbed 33.3% year over year.
Results benefited from an improvement in net interest income, and decline in expenses and provisions. Loan balances improved during the quarter. However, deteriorating capital position was an undermining factor.
Net income available to common shareholders came in at $106.7 million compared with $65.8 million reported in the prior-year quarter.
Revenues Improve, Expenses Decline
Net revenues, on a fully-taxable basis, were up 6.9% year over year to $402.7 million in the quarter. Also, results surpassed the Zacks Consensus Estimate of $396 million.
Net interest income, on a fully-taxable basis, totaled $307.8 million, up 7.9% year over year. Further, net interest margin expanded 14 basis points (bps) year over year to 3.10%.
Non-interest income was up 3.6% year over year to $94.9 million. A rise in almost all components of income drove the upswing.
Non-interest expenses decreased 3.4% on a year-over-year basis to $248.6 million. The decline was due to fall in all components, other than compensation and benefits, and occupancy and equipment expenses.
Efficiency ratio was 58.4%, in line with the prior-year period.
As of Jun 30, 2018, total loans were $32.5 billion, up 1.3% from the prior-quarter end figure. Total deposits edged down 1.3% from the last quarter to $32.5 billion. However, the decline was a result of seasonal factors experienced by the company’s municipal and retail businesses every year.
Credit Quality Strengthens
As of Jun 30, 2018, non-performing assets were $187 million, down 5.6% year over year. Ratio of non-performing loans to total originated loans shrunk 4 bps from the year-earlier quarter to 0.56%. Also, provision for loan losses came in at $6.5 million, down 8.5% year over year.
Furthermore, net loan charge-offs declined 26.5% year over year to $5 million. Net loan charge-offs, as a percentage of average total loans on an annualized basis, came in at 0.06%, contracting 3 bps year over year.
Capital Position Deteriorates, Profitability Ratios Improve
Capital ratios of People’s United displayed mixed results. As of Jun 30, 2018, total risk-based capital ratio dropped to 12.5% from 12.6% recorded in the comparable quarter last year. Tangible equity ratio was 7.3%, down from 7.5% in the year-ago quarter.
The company’s profitability ratios improved. Return on average tangible stockholder equity was 13.9%, up from 8.7% in the prior-year quarter. Return on average assets of 1% inched up from 0.65% reported in the year-earlier quarter.
Our Viewpoint
Rising loans and expanding net interest margin remain the key positive for People’s United. The company is steadily growing through acquisitions, which is likely to continue in the near future as well. Also, the company’s declining operating expenses will likely drive bottom-line growth. Nevertheless, the company’s high exposure to commercial loans can be risky and dampen its profitability over the long run.
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.
Among other stocks belonging to the same industry, Banner Corporation (BANR - Free Report) and Heritage Financial Corporation (HFWA - Free Report) are set to release their earnings numbers on Jul 25, while OceanFirst Financial Corp. (OCFC - Free Report) is slated to report its figures on Jul 26.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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