The dramatic downtrend experienced by several leading banks over the past year as result of the credit crisis, has created in the short-term at least, a legacy - the effects of which will (relatively speaking) make complexity issues for our society a bit more complex. Based on constant and unfavorable changing market conditions, many banks, particularly those with high subprime-mortgage exposure - have had to simplify business processes, among other things, in order to just survive. Some have had to differentiate themselves more effectively and so outperform competitors.
Nevertheless, realistically speaking, not many banks can currently refer to words such as ‘asset quality’ or ‘healthy liquidity’ without a heavy doze of skepticism on the part of the public. However, there are some exclusions here and there.
People’s United Bank (NASDAQ:PBCT), a diversified financial services co. headquartered in New England, with over $21 billion in total assets and more than 300 branches, instead of implementing strategies that tend to preserve capital, is currently, according to Barron’s, looking for acquisitions.
In its August 25 edition, Barron’s points out that the bank could gain around 20% in value based on the acquisitions it will make. Consequently, its shares would better reflect the bank’s worth at around $22 per share. PBCT closed on Friday just above the $17 level.
Philip R. Sherringham, Chief Executive Officer, as noted by Reuters - was quoted as saying that an acquisition could help the bank double its earnings over the next two to three years. He also added that it was “'not impossible' for a deal to be done this year”.
Sherringham however, did not elaborate on potential targets.
In 2006, PBCT moved from a state charter to a federal charter under the Office of Thrift Supervision [OTS]. Then, during fiscal ‘07 the Bridgeport, CT-based co. accelerated its pace of evolution as it completed its second-step conversion, raising over $3.4 billion in capital.
The bank currently has a 33.8% ttm in operating margins and an exceptionally strong capital position of nearly $3 billion in cash, which provides it with significant strength and flexibility as it confronts a challenging environment for the economy in general and the banking sector in particular. Asset quality continues to remain the company’s primary area of focus, which so far has remained strong.