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Muted Lending to Mar People's United (PBCT) Q3 Earnings

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People's United Financial, Inc.  is scheduled to report third-quarter 2019 results on Oct 17. Both revenues and earnings are expected to have jumped 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.

People's United posted in-line earnings in second-quarter 2019. Improvement in loans and deposit balances, along with higher fee income was offset by elevated expenses and provisions.

Notably, People's United surpassed estimates on one occasion and posted in-line results in two of the trailing four quarters, the average beat being 0.74%.

People's United Financial, Inc. Price and EPS Surprise

The Zacks Consensus Estimate for earnings for the to-be-reported quarter is 33 cents, which suggests improvement of 1.3% from the year-ago reported number. Further, the consensus estimate for sales of $455.5 million indicates 14.3% growth.

Factors to Influence Q3 Results

Soft Loan Growth: A slowdown in lending — mainly in the areas of commercial and industrial, and commercial real estate — might have hurt the bank’s interest income.

Management expects loan portfolio growth in the range of 10% to 12% for 2019, the impact of which is likely to be reflected in the upcoming results as well. This goal excludes the transactional portion of the New York multifamily portfolio, which is in runoff mode.

Muted Net Interest Income (NII): A soft lending scenario during the quarter is predicted to have hurt NII to an extent, as it accounts for nearly 72% of People's United’s loan balances. Moreover, the company’s net interest margin is expected to have been affected by the decline in rates, yield-curve flattening and steadily rising deposit betas.

Fee Income Growth: On strong retail banking, fee income might have increased for the bank. Additionally, the company projects non-interest income to be up 2-4% in 2019, the impact of which is likely be reflected in third-quarter results.

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

We cannot conclusively predict an earnings beat for People's United as it doesn’t have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.

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 -3.03%.

Zacks Rank: People’s United currently has a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Huntington Bancshares Incorporated (HBAN - Free Report) has an Earnings ESP of +3.03% and at present, holds a Zacks Rank of 3. It is slated to report quarterly results on Oct 24. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for M&T Bank Corporation (MTB - Free Report) is +0.55% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 17.

The Earnings ESP for BancorpSouth Bank is +3.28%, and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 21.

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