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Fee Income to Support People's United's (PBCT) Q2 Earnings

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People's United Financial, Inc. is scheduled to report second-quarter 2021 results on Jul 15. While its revenues might have declined year over year, earnings are anticipated to have improved.

Before we discuss the factors that are likely to have impacted the company’s performance, let’s take a look at how it performed in the last reported quarter.

People's United earnings beat the Zacks Consensus Estimate in first-quarter 2021. Lower expenses, along with improved deposit balances, were partially offset by reduced loans and revenues.

In the trailing four quarters, the company surpassed estimates on three occasions and posted in-line results in the other, the average beat being 9.91%.

The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 32 cents, which suggests a rise of 33.33% from the year-ago reported number. However, the consensus estimate for sales of $482.7 million indicates a 2.5% decline.

Major Factors at Play

Solid Fee Income: The continued strength in economic activities in the quarter is likely to have supported fee income. The Zacks Consensus Estimate for bank service charges of $24.52 million calls for a 21% year-over-year rise.

Owing to decreased unemployment level, consumer optimism on new stimulus package as well as extensive vaccination drives, the company’s investment management fees are likely to have increased on higher client activities and continued volatility in the markets. The Zacks Consensus Estimate of $19.24 million for investment management fees calls for a 10.5% year-over-year improvement.

Likewise, the consensus estimate of $13.2 million for commercial lending fees indicates a rise of 25% from the prior-year quarter.

The consensus estimate for total non-interest income of $94 million suggests 4.4% year-over-year growth.

Soft Loan Growth: Overall growth in loans was somewhat muted in the second quarter. Per the Fed’s latest data, similar to the past few quarters, loan demand (mainly commercial and industrial, and residential real estate loans) was subdued despite re-opening of the economy. Nonetheless, rise in consumer loans is expected to have offered some respite.

Muted Net Interest Income (NII): Bleak demand for loans, along with a low interest rate environment, might have hurt People's United’s NII in the to-be-reported quarter. Flattening of the yield curve is expected to have weighed on net interest margins too.

The Zacks Consensus Estimate of $55.8 billion for quarterly average earning assets indicates 3.1% year-over-year growth.

The consensus estimate of $392 million for NII suggests a 3.5% fall from the year-ago quarter.

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 risen.

Earnings Whispers

Our quantitative model shows that People’s United does not have 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 this time.

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 +11.01%.

Zacks Rank: People’s United currently carries a Zacks Rank of 4 (Sell).

Banks That Warrant a Look

Here are some bankstocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

The Bank Of New York Mellon (BK - Free Report) is slated to report quarterly results on Jul 15. The company currently has an Earnings ESP of +1.84 and carries a Zacks Rank of 3.

KeyCorp (KEY - Free Report) is slated to report quarterly results on Jul 20. The company has an Earnings ESP of +0.26% and carries a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BankUnited, Inc. (BKU - Free Report) is set to release earnings numbers on Jul 22. The company holds a Zacks Rank of 3, at present and has an Earnings ESP of +1.04%.

In-Depth Zacks Research for the Tickers Above

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The Bank of New York Mellon Corporation (BK) - free report >>

KeyCorp (KEY) - free report >>

BankUnited, Inc. (BKU) - free report >>

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