People’s United Reports as Expected

Regional bank, People's United Financial Inc. (PBCT) reported its fourth-quarter 2012 operating earnings per share of 19 cents, in line with the Zacks Consensus Estimate. Earnings compared favorably with 17 cents per share, reported in the prior-year quarter and were in line with the prior quarter.

Lower non-interest expenses and reduced provision for loan losses were the tailwinds for the quarter. However, lower revenues aided by fall in net interest income acted as a dampener.

Operating income was reported at $63.2 million compared with $57.1 million in the prior-year quarter and $64.4 million in the prior quarter. Including after-tax severance-related costs of $2.0 million, net income came in at $61.2 million or 18 cents per share in the fourth quarter of 2012.

For full-year 2012, operating income was 75 cents per share, up from 66 cents reported in the prior year and outpacing the Zacks Consensus Estimate by 2 cents. Including after-tax merger-related expenses and other adjustments of 3 cents per share, net income summed to 72 cents.

Performance in Detail

Total revenues, net of expense reported was $309.4 million in the quarter, down 0.6% year over year and 2.2% sequentially, due to lower net interest income, partially offset by higher non-interest income. Moreover, results lagged the Zacks Consensus Estimate of $314.0 million.

For full year, revenues were $1,242.5 million, up 1.8% from $1,221.0 million in 2011. However, this compares unfavorably with the Zacks Consensus Estimate of $1,258.0 million.

Net interest income was $225.1 million in the reported quarter, down 6.1% year over year and 4.1% sequentially. Moreover, in the ongoing historically low interest rate environment and with an asset sensitive balance sheet, operating net interest margin decreased 19 basis points sequentially to 3.63%.

Primarily, new loan volume at lower rates and lower interest income on acquired loans led to the reduction in margin. These were partly offset by lower funding costs and improved mix. Further, margin was down 40 basis points year over year.

Yet, non-interest income was $84.3 million, up 17.