What drove the rise: People’s United Financial, Inc. (NASDAQ: PBCT) stock rose over 2% on January 18th, 2019 (As of 11:40 am GMT-5 ; Source: Google finance) after the company beaten the earnings estimates for the fourth quarter of FY 18. PBCT in the fourth quarter of FY 18 has reported the adjusted earnings per share of 35 cents, beating the analysts’ estimates for the adjusted earnings per share of 34 cents, according to figures compiled by Thomson Reuters.
Deal Synergies: In June, the company had successfully closed and integrated the acquisition of Vend Lease, which is an equipment finance company established in 1979 that operates primarily in the hospitality industry. The transaction further strengthens the network of specialty finance experts and bolsters the nationwide businesses. In October, the company has also successfully closed the acquisition of First Connecticut Bancorp, the holding company for Farmington Bank. The transaction is the classic in-market acquisition of a high-quality franchise that bolsters the well-established presence in Central Connecticut and Western Massachusetts. The integration is progressing extremely well, the core system conversion will take place later this month and the company are on track to realize projected cost saves. In November, the company had announced the acquisition of BSB Bancorp, which is the holding company for Belmont Savings Bank. The transaction will deepen the presence in the Greater Boston area, particularly in the suburbs west of the city, which are attractive banking markets.
Pleasing Guidance: For the full year 2019, the deposit is expected to grow in a 3% to 5% range on both a period-end and average balance basis. The next goal is for net interest income to increase in the range of 10% to 12%. Embedded in this goal is the expectation for the net interest margin to be in the range of 3.15% to 3.25%. PBCT expect noninterest income on an operating basis to grow in the range of 2% to 4% as compared to $376 million in 2018. Operating noninterest expenses, which exclude merger-related costs, are anticipated to be in the range of $1.04 billion to $1.06 billion as compared to $985 million in 2018. The company also expect to maintain excellent credit quality with a provision in the range of $35 million to $45 million. In addition, the company anticipate our effective tax rate for the year to be in the range of 20% to 22%. Finally, the company plan to maintain strong capital levels with the expectation that at year-end, holding company common equity Tier 1 capital ratio will be in the range of 10% to 10.5%