People’s United reports Q2 earnings of $16 million or $0.04 per share

first_imgPeople’s United Financial, Inc.(PBCT 14.00, -0.15, -1.06%) today announced net income of $16.0 million, or $0.04 per share, for the second quarter of 2010, compared to $13.6 million, or $0.04 per share, for the first quarter of 2010, and $25.3 million, or $0.08 per share, for the second quarter of 2009. Included in both this quarter’s and first quarter’s results are pre-tax merger-related, system conversion and one-time expenses totaling $23.2 million and $23.4 million, respectively. Excluding the effect of these items, net income would have been $31.8 million, or $0.09 per share, for the second quarter of 2010 and $29.2 million, or $0.08 per share, for the first quarter of 2010. People’s United is the parent company of the former Chittenden Bank.As previously reported, People’s United Financial completed its acquisitions of Financial Federal Corporation on February 19, 2010 and Butler Bank on April 16, 2010. Accordingly, Financial Federal’s and Butler Bank’s results of operations are included as of the respective acquisition dates, and prior period results have not been restated to include Financial Federal and Butler Bank.The Board of Directors of People’s United Financial declared a $0.1550 per share quarterly dividend, payable August 15, 2010 to shareholders of record on August 1, 2010. Based on the closing stock price on July 14, 2010, the dividend yield on People’s United Financial common stock is 4.4 percent.People’s United Financial also announced today definitive agreements to acquire Smithtown Bancorp, Inc. based in Hauppauge, New York, and LSB Corporation based in North Andover, Massachusetts. Further information regarding these acquisitions is included in a separate release.”The announcement today of the acquisition of two financial institutions within markets contiguous to our existing footprint, while at the same time reporting another solid quarter of operating results, is a testament to the strong financial position of People’s United Financial,” stated Jack Barnes, interim President and Chief Executive Officer. “The strength of our capital and liquidity, asset quality and earnings, as well as the fact that our balance sheet remains funded almost entirely by deposits and stockholders’ equity, continue to set us apart from most in the industry.”Barnes added, “While we continue to evaluate potential acquisition opportunities, we are actively pursuing other capital deployment activities. In this regard, we plan to open two new branches in downtown Boston – one in the Prudential Center and one in the Financial District – before year end, thereby providing an important extension to our growing footprint in the greater Boston area. Further, during the second quarter we repurchased 3.7 million shares of our common stock for approximately $52 million.”Barnes concluded, “In connection with the final phase of our core systems conversion, which is scheduled to be completed this weekend, we have begun the process of rebranding our branches in Vermont, New Hampshire, Massachusetts and Maine to People’s United Bank. We are pleased to have reached this milestone, which will provide all of our customers with the added convenience of being able to bank seamlessly at any of our nearly 300 branches along with the instant recognition of the People’s United Bank name on branches from Bangor, Maine to Scarsdale, New York.””On an operating basis, excluding merger-related, system conversion and one-time expenses, earnings were $31.8 million, or 9 cents per share this quarter,” said Paul D. Burner, Senior Executive Vice President and Chief Financial Officer. “Significant drivers of the company’s performance this quarter were an improvement in the net interest margin and modest loan growth across our strategic lending businesses, partially offset by higher net loan charge-offs. The net interest margin improved 21 basis points to 3.68 percent, primarily reflecting the benefit of a full quarter of Financial Federal. A single non-performing commercial loan accounted for $6.0 million, or 72 percent, of the quarterly increase in net loan charge-offs.”Commenting on asset quality, Burner continued, “Loans acquired in connection with the Financial Federal and Butler Bank acquisitions have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio’s historical allowance for loan losses. As such, selected asset quality metrics have been highlighted to distinguish between the ‘originated’ portfolio and the ‘acquired’ portfolios. For the originated loan portfolio, representing all loans other than those acquired in the Financial Federal and Butler Bank transactions, non-performing loans totaled $219.7 million at June 30, 2010, and the ratio of non-performing loans to originated loans was 1.56 percent, compared to $192.3 million and 1.36 percent, respectively, at March 31, 2010. Non-performing loans in the acquired loan portfolios, which represent those loans acquired in the Financial Federal and Butler Bank transactions that meet our definition of non-performing but for which the risk of loss has already been considered by virtue of our estimate of acquisition-date fair value and/or the existence of an FDIC loss-share agreement, totaled $60.1 million at June 30, 2010.”Non-performing assets totaled $284.5 million at June 30, 2010, a $37.0 million increase from March 31, 2010, of which $13.1 million is attributable to REO acquired in connection with the Butler Bank acquisition. Non-performing assets equaled 2.01 percent of originated loans, REO and repossessed assets at June 30, 2010 compared to 1.74 percent at March 31, 2010. At June 30, 2010, the allowance for loan losses as a percentage of originated loans was 1.23 percent and as a percentage of non-performing originated loans was 79 percent, compared to 1.22 percent and 90 percent, respectively, at March 31, 2010.Second quarter net loan charge-offs totaled $17.8 million compared to $9.5 million in the first quarter of 2010. Net loan charge-offs as a percent of average loans on an annualized basis were 0.46 percent in the second quarter of 2010 compared to 0.26 percent in this year’s first quarter. The level of the allowance for loan losses is unchanged from March 31, 2010.In the second quarter of 2010, return on average tangible assets was 0.32 percent and return on average tangible stockholders’ equity was 1.7 percent, compared to 0.28 percent and 1.5 percent, respectively, for the first quarter of 2010. At June 30, 2010, People’s United Financial’s tangible equity ratio stood at 18.0 percent.Source: BRIDGEPORT, Conn., July 15, 2010 /PRNewswire via COMTEX/ —last_img read more