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Fee Income to Support People's United (PBCT) Q4 Earnings
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People's United is scheduled to report fourth-quarter 2020 results on Jan 21. Revenues and earnings are expected to have declined year over year.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
In third-quarter 2020, the company’s earnings outpaced the Zacks Consensus Estimate. Rise in revenues, aided by high net interest income, drove the results. Also, decent loan and deposit balances reflected organic growth, with its capital position remaining strong. However, elevated expenses and provisions were major drags. Moreover, lower fee income was an undermining factor.
The company surpassed estimates on three occasions and posted in-line results in the other, the surprise being 20.89%, on average.
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 32 cents, suggesting a fall of 13.5% from the year-ago reported number. Also, the consensus estimate for sales of $488.9 million indicates a 3.6% decline.
Peoples United Financial, Inc. Price and EPS Surprise
Low Net Interest Income: The overall lending scenario was soft during the October-December quarter, with commercial real estate and consumer loan portfolios having offered some support. Conversely, weakness in revolving home equity and commercial and industrial activities are expected to have offset growth. Low deposit costs and higher average interest earning assets might have been an offsetting factor for margins.
With the interest rates near-zero level, People's United’s net interest margin and NII are likely to have been adversely impacted.
The Zacks Consensus Estimate of $52.8 million for average interest earning assets calls for a 6.2% year-over-year improvement during the quarter under review, while the NII is expected to improve 2.3% to $399 million.
Fee Income Growth: Gradual resumption of economic activities in the fourth quarter is likely to have supported fee income. The Zacks Consensus Estimate for bank service charges is $26.23 million, suggesting 7.1% sequential growth, while that for income from insurance is pegged at $5.1 million, indicating a 47.4% fall from prior-quarter figure.
Given the strength in equity markets, the assets price shot up. This is likely to have resulted in higher investment management fees for People’s United. The consensus estimate of $18.5 million for the same suggests a 10.8% rise year over year. Likewise, the Zacks Consensus Estimate for cash management fees of $8.8 million for the quarter indicates a 23.9% jump from the prior-year quarter.
The consensus estimate for non-interest income is pinned at $138 million, indicating a 36.6% sequential rise.
Higher Expenses: People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have gone up.
Here is what our quantitative model predicts:
People’s United has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for People’s United is +4.27%.
Zacks Rank: People’s United currently carries a Zacks Rank of 3, which increases the predictive power of ESP.
Other Banks Worth a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for CullenFrost Bankers, Inc. (CFR - Free Report) is +4.5% and the stock sports a Zacks Rank of 1 (Strong Buy), at present. The company is slated to report fourth-quarter 2020 numbers on Jan 28.You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Bancshares Incorporated (HBAN - Free Report) is set to release earnings figures on Jan 22. The company, which flaunts a Zacks Rank of 1 at present, has an Earnings ESP of +3.39%.
BankUnited, Inc. (BKU - Free Report) is scheduled to announce quarterly results on Jan 21. The company has an Earnings ESP of +2.46% and currently carries a Zacks Rank of 2.
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Fee Income to Support People's United (PBCT) Q4 Earnings
People's United is scheduled to report fourth-quarter 2020 results on Jan 21. Revenues and earnings are expected to have declined year over year.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
In third-quarter 2020, the company’s earnings outpaced the Zacks Consensus Estimate. Rise in revenues, aided by high net interest income, drove the results. Also, decent loan and deposit balances reflected organic growth, with its capital position remaining strong. However, elevated expenses and provisions were major drags. Moreover, lower fee income was an undermining factor.
The company surpassed estimates on three occasions and posted in-line results in the other, the surprise being 20.89%, on average.
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 32 cents, suggesting a fall of 13.5% from the year-ago reported number. Also, the consensus estimate for sales of $488.9 million indicates a 3.6% decline.
Peoples United Financial, Inc. Price and EPS Surprise
Peoples United Financial, Inc. price-eps-surprise | Peoples United Financial, Inc. Quote
Factors at Play
Low Net Interest Income: The overall lending scenario was soft during the October-December quarter, with commercial real estate and consumer loan portfolios having offered some support. Conversely, weakness in revolving home equity and commercial and industrial activities are expected to have offset growth. Low deposit costs and higher average interest earning assets might have been an offsetting factor for margins.
With the interest rates near-zero level, People's United’s net interest margin and NII are likely to have been adversely impacted.
The Zacks Consensus Estimate of $52.8 million for average interest earning assets calls for a 6.2% year-over-year improvement during the quarter under review, while the NII is expected to improve 2.3% to $399 million.
Fee Income Growth: Gradual resumption of economic activities in the fourth quarter is likely to have supported fee income. The Zacks Consensus Estimate for bank service charges is $26.23 million, suggesting 7.1% sequential growth, while that for income from insurance is pegged at $5.1 million, indicating a 47.4% fall from prior-quarter figure.
Given the strength in equity markets, the assets price shot up. This is likely to have resulted in higher investment management fees for People’s United. The consensus estimate of $18.5 million for the same suggests a 10.8% rise year over year. Likewise, the Zacks Consensus Estimate for cash management fees of $8.8 million for the quarter indicates a 23.9% jump from the prior-year quarter.
The consensus estimate for non-interest income is pinned at $138 million, indicating a 36.6% sequential rise.
Higher Expenses: People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have gone up.
Here is what our quantitative model predicts:
People’s United has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for People’s United is +4.27%.
Zacks Rank: People’s United currently carries a Zacks Rank of 3, which increases the predictive power of ESP.
Other Banks Worth a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for CullenFrost Bankers, Inc. (CFR - Free Report) is +4.5% and the stock sports a Zacks Rank of 1 (Strong Buy), at present. The company is slated to report fourth-quarter 2020 numbers on Jan 28.You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Bancshares Incorporated (HBAN - Free Report) is set to release earnings figures on Jan 22. The company, which flaunts a Zacks Rank of 1 at present, has an Earnings ESP of +3.39%.
BankUnited, Inc. (BKU - Free Report) is scheduled to announce quarterly results on Jan 21. The company has an Earnings ESP of +2.46% and currently carries a Zacks Rank of 2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>