On heels of mega-merger announcement, People’s United’s 1Q profits rise 11%

HBJ Photo | Joe Cooper People's United Bank at 1 Financial Plaza in downtown Hartford.

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By Zachary Vasile

In its first earnings report since announcing plans to merge with New York-based M&T Bank, Bridgeport’s People’s United Financial, the parent company of People’s United Bank, said its first-quarter profits rose nearly 11%.

Between Jan. 1 and March 31, the company’s net income climbed to $144.5 million, or 33 cents per common share, up from $130.4 million, or 30 cents per common share, in the year-ago period. Operating income rose from $141.1 million, or 33 cents per common share, in the first quarter of 2020 to $156.5 million, or 37 cents per common share, in the first quarter of 2021.

Senior Executive Vice President and CFO David Rosato attributed the gains to modestly higher net interest income, cost-control measures, and a negative provision for credit losses driven by an improved economic outlook. Rosato also cited strong deposit growth, which he linked to the latest round of federal economic stimulus payments and a net increase in Paycheck Protection Program balances.

The company did face headwinds, however, mainly in the form of lower yields in its securities portfolio and a decline in period-end loans.

People’s United Financial in February agreed to be acquired by Buffalo’s M&T Bank, and People’s United officials said Thursday that they expect that deal to close some time in the fourth quarter of this year.

The all-stock transaction, valued at $7.6 billion, would create a regional banking powerhouse with around $200 billion in assets and over 1,100 branches in 12 states.

Under the terms of the agreement, former People’s United shareholders would collectively own 28% of the new combined company.

People’s United Financial’s headquarters in Bridgeport would become the New England regional headquarters for M&T.

The company also provided an update on its planned exit from some Northeast Stop & Shop grocery stores, first announced in January. People’s United said Thursday it will begin closing its banking counters at New York Stop & Shop locations in the third quarter, with a full withdrawal expected to be completed over the course of one year.

Bank officials did not say what will become of the Connecticut Stop & Stop branches, which were also slated to be closed.

People’s United has held out the possibility of keeping some in-store counters in the state open under the right conditions, but the company has not said when it will make a final determination.

People’s United operates 140 Stop & Shop branch locations, and 84 of them are in Connecticut.