On Nov 10, 2014, we issued an updated research report on People's United Financial Inc. (PBCT). Given the competitive environment in the industry, regulatory restrictions and higher capital requirement, expense management has become a priority in the financial sector. This Connecticut-based savings and loan institution has been undertaking cost control measures to achieve operational efficiency and drive higher operating income.
In third-quarter 2014, non-interest expenses decreased 1.7% year over year to $208.8 million. For the remaining quarter of 2014, expenses are expected to trend in the range of $205–$207 million. With the implementation of expense reduction initiatives and strengthening of the balance sheet aided by strategic revenue initiatives, the company aims to reach efficiency ratio in the low 60s in 2014.
Further, third-quarter 2014 marked the16th consecutive quarter of loan growth. Loans increased 11.7% year over year in the first nine months of 2014. Also, average deposits rose 9.2% year over year in the same time period.
Though we remain optimistic about the efforts taken by People’s United, concern arises owing to several issues including declining net interest margin, sluggish economic recovery that limits growth prospects and the prevailing stringent regulatory landscape.
Analysts’ bearish stance on the stock was reflected in the movement of the Zacks Consensus Estimate over the past 30 days. For 2014, the Zacks Consensus Estimate declined 1.2% to 83 cents per share while it fell 2.2% to 89 cents for 2015.
People’s United currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked companies in the same sector include Provident Financial Holdings, Inc. (PROV), HopFed Bancorp Inc. (HFBC) and Great Southern Bancorp Inc. (GSBC). All three carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment